Written By
Drue Schofield
Managing Director – Growth & Strategy
4Front | www.4front.net.au
Written By
Drue Schofield
Managing Director – Growth & Strategy
4Front | www.4front.net.au
In the trades, cash flow can make or break your business.
You can have a full book of jobs, great staff, and top-quality work – but if the cash isn’t there when you need it, stress levels go through the roof. We’ve seen too many good businesses come undone, not because they weren’t profitable on paper, but because they ran out of cash in the real world.
Managing Director Drue Schofield with 4Front Team – Growth & Strategy | 4Front Accountant and Advisers | www.4front.net.au
Managing Director Drue Schofield with 4Front Team – Growth & Strategy | 4Front Accountant and Advisers | www.4front.net.au
We work closely with trades and construction business owners to help them build businesses that are both strong and sustainable. So, let’s break down the biggest cash flow pitfalls in the industry – and how to avoid them.
1. Relying on the Next Job to Cover the Last One
We see this all the time: last month’s job ran over budget, but the invoice for the current job will hopefully fix the shortfall. It’s a dangerous cycle as ‘hope’ is not a strategy – and one that keeps business owners on the back foot.
✅ Pro Fix: Start by understanding your break-even point and building a cash buffer. Use job costing tools and cash flow forecasts to spot red flags before they hit your bank account.
2. Slow Invoicing = Slower Payments
If you wait until the end of the week (or month) to send invoices, you’re creating a delay before the client even has a chance to pay. And in construction, payment terms can already drag out 30+ days.
✅ Pro Fix: Invoice as soon as work is completed or use progress payments for longer projects. Automate follow-ups and consider offering early payment incentives or charging late fees where appropriate.
3. Not Tracking Retentions or Underpayments
In some sectors of construction, part of your payment is held back (retention), often for months. If you’re not tracking these properly, you might assume more money is coming than actually is – and that creates gaps.
✅ Pro Fix: Record retentions separately in your accounting system. Set reminders to follow up when they’re due and ensure your team communicates clearly about final completion and release triggers.
4. Using the ATO as a Piggy Bank
We get it – when things are tight, that GST or PAYG money sitting in your bank account looks tempting. But falling behind on your ATO obligations can lead to penalties, payment plans, or worse.
✅ Pro Fix: Set up a separate bank accounts just for tax. Each week, transfer a % of income to cover GST, PAYG, and super. This habit can save your business.
Written By
Drue Schofield
Managing Director – Growth & Strategy
4Front | www.4front.net.au
Australia and New Zealand’s #1 Business Coaching and Advisory Organisation, dedicated to the Trades and Construction Industry. With over 20 years of practical experience, we have a proven track record of helping more than 3900 business owners gain greater clarity, consistency and choice.
Australia and New Zealand’s #1 Business Coaching and Advisory Organisation, dedicated to the Trades and Construction Industry. With over 20 years of practical experience, we have a proven track record of helping more than 3900 business owners gain greater clarity, consistency and choice.
5. Overtrading Without a Plan
Winning a heap of new work feels great – until you realise you’ve outgrown your capacity or run out of cash to fund it. More work = more upfront expenses (labour, materials, equipment) before any money comes in.
✅ Pro Fix: Talk to your advisor before taking on a big growth spurt. Line up finance or trade credit in advance, and always forecast cash needs for upcoming months.
6. No Cash Flow Forecast = No Visibility
Many business owners rely on gut feel or a glance at the bank balance to make decisions. But that only tells you where you are now — not where you’re heading.
✅ Pro Fix: Use a rolling 13-week cash flow forecast. It doesn’t need to be fancy. A simple Excel spreadsheet is fine if you update it weekly. Your advisor can help you build one that fits your business.
Final Thought: Profit ≠ Cash
Just because your P&L shows a profit doesn’t mean you’ve got money in the bank.
Understanding the difference – and managing it proactively – is key to staying ahead.
We help tradies and construction business owners get off the cash flow rollercoaster and build a business that works with them, not against them.
Thanks to our partner, 4Front for this insightful article. If you would like to learn more about the team at 4FRONT, connect with them here: https://4front.net.au/
5. Automate What You Can – And Stay on Top of Debtors!
Time is money, and manual admin burns both. The more you automate quoting, invoicing, and follow-ups, the more time you have to focus on actual billable work.
✅ Pro Tip: Set up automatic invoice reminders. Send progress claims quickly. And be ruthless with chasing slow payers – cash flow is king.
6. Forecast Cash Flow (Especially in Downtimes)
Trades businesses often ride a boom-bust cycle. One month you’re flat out, the next you’re wondering how to pay wages. That’s where forecasting comes in.
✅ Pro Trip: Use a rolling 13-week cash flow forecast to stay ahead. It’ll show you when to chase jobs, tighten spending, or line up finance – before things get tight.
7. Talk to an Advisor Who Gets Your Industry
A good accountant ticks the boxes. A great business advisor helps you build wealth, not just do tax. At 4Front, we partner with trades and construction clients to help them Plan, Grow & Succeed by scaling, and eventually stepping back when the time is right.
✅ Pro Tip: Don’t settle for reactive compliance work. Look for proactive advice around profit improvement, tax strategy, team structure, wealth creation and succession planning.
Final Word
You work hard. You deserve to be making solid profits and investing for retirement, not just endlessly paying everyone else and taking home ‘what’s left’. With the right systems, team, and advice around you, running a trades or construction business can be both profitable and enjoyable.
Thanks to our partner, 4Front for this insightful article. If you would like to learn more about the team at 4FRONT, connect with them here: https://4front.net.au/
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