Common cash flow problems for tradies


If you’re struggling to break even in your tradie business, it might be time to take a look at your cash flow. If you want to make sure you’re consistently making a profit, check out the most common cash flow problems to see if any apply!

Letting late payments slide
If you’re not actively following up on your invoices, you’re more likely to have issues with overdue payments. It can be difficult when you’ve already moved on to the next job, but you need to make sure you’re getting paid on time to keep your cash flow going. Set clear payment terms and schedule your follow ups – automation will be your friend here.

Growing too fast
You obviously want to grow your company, but you need to do it at a rate that’s sustainable. If you’re investing too much too fast, it could all go down the drain because you haven’t effectively planned your resourcing. If you do want to grow faster, you’ll need to make sure your finances are healthy and you’ve got a bit of cash tucked away.

Not having a cash buffer
It’s fairly common in the tradie industry to have ups and downs in your workload depending on the season and the demand. This is why it’s important to have an amount of cash available as a back-up in case things don’t work out how you planned. You should have enough to cover your overheads for at least a few months.

Lower gross margins
It can be easy to offer lower prices to win more jobs, but if you’re getting paid less than you’re spending then of course it doesn’t make sense. Take a look at the total average cost of the jobs you take on, including labour and material costs, and then adjust your pricing accordingly so that you’re actually making money.

High overhead expenses
It can be easy to forget the everyday expenses of running your business. Phone bills and office stationery can add up quickly if you aren’t aware of what you’re spending. Take some time to track your expenditure on these and see where you might be able to cut back or look for a less costly option.

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