Why Cash Flow Matters
You can be profitable on paper but still run out of cash. Cash flow problems happen when:
- Customers pay late
- Materials are paid upfront
- Work is seasonal
- Big tax bills come due
Strategies
Get Paid Faster
- Request deposits (20-50% depending on job size)
- Progress payments on longer jobs
- Invoice immediately on completion
- Offer multiple payment methods
- Follow up promptly on overdue invoices
Manage Outgoings
- Set up supplier accounts (30-day terms)
- Don't overbuy materials
- Time big purchases strategically
- Keep a cash buffer (3-6 months expenses)
Plan for Tax
- Set aside GST immediately (keep in separate account)
- Save for quarterly BAS
- Budget for annual tax
- Pay super monthly to avoid surprise bills
Warning Signs
- Regularly dipping into GST money
- Delaying supplier payments
- Taking jobs below cost to cover cash
- Avoiding looking at the accounts