Quick answer
Tradies run short of cash because costs land before payment: materials, wages and fuel go out the week the job starts, while the invoice is paid weeks later. Fix it by taking deposits, claiming progress payments, invoicing on completion day, setting aside GST and super weekly, and using supplier terms. Short-term finance can cover the gap on large jobs.
Key points
- A job is a loan you make to your customer: you pay for materials and labour first, so structure payments to shrink that loan
- Progress claims and deposits do more for cash flow than any amount of chasing late invoices
- Retention and variation disputes lock up money for months; know your state's security of payment rules
- Set aside GST, PAYG and super weekly into a separate account so the BAS never feels like a surprise
- For big jobs, invoice finance or a short-term facility can cover the gap, but price it against the job's margin
Here is a thing nobody tells new tradies: every job you take is a loan you make to a stranger.
You buy the pipe, the cable or the timber. You pay the apprentice on Friday. You fill the ute. Then you wait, sometimes weeks, to be paid. If the customer pays on completion, the loan is short. If they pay in 30, 45 or 60 days, or hold back a slice for 12 months, you’ve lent them real money with no interest and no security.
Cash flow for tradies is mostly the work of shrinking that loan. These are the levers, roughly in order of how much they move.
How big is the loan you’re making on each job?
Before tactics, measure the gap. For one typical job, add the cost you’ll pay before the invoice is settled.
| Item | Example amount | When you pay |
|---|---|---|
| Materials | $14,000 | Week 1 to 3 |
| Labour (two staff, three weeks) | $9,600 | Weekly |
| Subcontractor | $3,500 | Fortnight 2 |
| Fuel, hire, consumables | $900 | Ongoing |
| Cash out before payment | $28,000 | |
| Job price (ex GST) | $38,000 | Paid day 30 after invoice |
On that job you carry $28k for around seven weeks, from first order to payment. If you run three such jobs at once, you need about $84k of working capital that doesn’t exist in your account. That is why profitable businesses with full books get stuck. Our guide on why profitable businesses run out of cash goes deeper on the mechanics.
Which lever is worth pulling first?
Take the money earlier
Deposits. A deposit that covers materials removes most of the loan. For residential building work, states set limits on how much you can ask upfront, so check your licensing regulator before choosing a figure. For commercial work, an upfront payment for long-lead materials is a reasonable request.
Progress claims. Break the job into stages tied to something visible: rough-in complete, frame signed off, fit-off, practical completion. Put the amounts in the quote. A $38k job in four stages cuts your exposure from $28k to a rolling $7k to $10k.
Invoice on the day. An invoice sent on completion day is paid sooner than one sent at month end. Send from site on your phone if you must. A gap of two weeks between finishing and invoicing is a gift to the customer.
Make paying easy. A bank transfer reference, a pay-now link, and your terms in writing. Our guide to getting customers to pay faster has the follow-up routine.
Know the rules that protect your claims
Construction has its own payment laws. Security of payment legislation in each state gives contractors a faster route than court for unpaid progress claims, with short deadlines for serving claims and for responses. Victoria’s Act was amended with effect from 15 April 2026, including changes to the “excluded amounts” regime and the time to submit claims, which commentators say makes adjudication more practical for subcontractors. Rules and time limits differ by state, so read your own state’s current Act or ask your industry association before relying on any summary.
The practical habit that matters everywhere: serve claims correctly and on time. A payment claim that isn’t in the right form, or arrives a day late, can lose its statutory strength. If your claims are hit and miss, a bookkeeper or an app that issues compliant claims is cheap insurance.
Control what goes out
Supplier terms. Open trade accounts with your main suppliers and aim for 30 days, with monthly statements. If you can order on Monday and be paid by the customer before the supplier’s statement is due, the job funds itself. See how to negotiate better supplier terms.
Pass on price rises. A quote written in March for a September start can be thousands out by the time materials arrive. Put a validity period on every quote and a clause for material price movement on longer jobs.
Hire by the job. Owning a scissor lift that sits idle is expensive. Hire for the job and build it into the price.
Vehicles and tools. Work-ute payments are a fixed monthly outflow; compare options in how to finance a work ute.
Why does the BAS keep ambushing tradies?
Because the GST you collect isn’t yours. On a $38k job, $3,800 of the $41,800 invoice is GST, and PAYG withholding and instalments are also due, and super for staff. Spend it, and the quarter-end bill arrives with nothing set aside.
A simple routine:
- Open a second account called “tax and super”.
- On the day a customer pays, move the GST portion and a set percentage for income tax into it. Ask your accountant for the percentage that fits your structure.
- Pay super into that account weekly from wages, so a quarter’s worth isn’t a lump.
- Never touch the account for materials. If you have to, that is the signal you need finance, not that the account is spare cash.
When statements are overdue anyway, our guides on what happens if you can’t pay your BAS and super guarantee obligations and cash flow explain how to handle it. Planning for the end of the financial year is covered in preparing for tax-time cash flow.
What about retention and variations?
Retention is money held back, commonly a small percentage of the contract value, until defects are fixed or a period passes. It can tie up thousands for months. Negotiate for it to be released at practical completion where possible, or replaced by a bank guarantee, and track the release date in a diary.
Variations are where margins disappear. Get the change in writing, with a price, before doing the work. A verbal “yeah, just add that” is almost impossible to claim later.
Example: an electrician and the $52k fit-out
This is an illustrative scenario. A two-person electrical business in Newcastle wins a $52k commercial fit-out, paid 45 days after invoice. The supply and labour will cost about $34k over six weeks.
With a single invoice at the end, the owner would carry $34k for around 11 weeks, which more than doubles the business’s usual exposure. Instead, the quote has a 20 per cent deposit, two progress claims at rough-in and fit-off, and a final claim on completion. Retention is 5 per cent, released on practical completion.
The deposit covers the main cable and switchgear order. The first claim covers wages. By the time the electrician is out of pocket, the maximum exposure is about $9k, not $34k, and the supplier account, on 30-day terms, is paid from the second claim.
A bank overdraft would have covered $9k easily. The point of the structure was that no borrowing was needed at all.
When does finance make sense?
Even with good habits, large jobs can outgrow your cash. That’s normal and not a failing. The cheapest finance is usually the one you already have: a bank overdraft or line of credit. Banks like tradies with steady work and clean statements, and a facility in place before you need it costs very little. Ask your bank first.
When the bank can’t move quickly enough, these are the usual tools:
| Gap | Fits | Why |
|---|---|---|
| Waiting on approved invoices | Invoice finance | Advances against what you’re owed; cost tracks how long you wait |
| Materials for a big contract | Working capital loan | Lump sum matched to the job; repaid when it pays |
| New vehicle or machine | Chattel mortgage | Asset-secured, spreads the cost over its life |
| Repeated gaps | A longer facility | If you borrow every quarter, a revolving limit beats repeated one-off loans |
Price any facility against the job: if finance costs $2k and the job’s margin is $9k, it may be worth it; if the margin is $2.5k, it isn’t. Industry pages for electricians, plumbers and builders go through what lenders look at.
What to avoid
- Starting a big job without a payment schedule. Agree the stages first.
- Using next job’s deposit to pay for this job’s materials. It works until a job stalls.
- Letting small debts age. A $3k invoice at 90 days is already a collections problem.
- Taking on work with a customer you can’t verify. Check the ABN and, for companies, the ASIC register.
- Borrowing to cover a loss-making job. Finance helps timing, not margins.
If you’re already behind, speak to the free Small Business Debt Helpline on 1800 413 828 before things escalate.
Got a job that’s bigger than your bank balance?
If there’s a contract on the table and the numbers don’t stack up yet, send us the job details and we’ll tell you what might fit.
Make the next big job fund itself
Most tradies we speak to don’t need a lecture; they need a way to say yes to the larger job without risking the week’s wages.
Enquiring takes about a minute and doesn’t involve a credit check, so asking won’t touch your credit file. We don’t blast your details to a pile of lenders; one real person reads your situation and calls you. Tell us the job size, the payment terms and what you’ve already tried, accurately, so the first option on the table is the one that fits.
Frequently asked questions
Why do profitable tradies still run out of cash?
Because profit is booked when the job is done, while cash only arrives when the customer pays. Materials, wages, fuel and subcontractors are paid first. A tradie with plenty of work can still be short if jobs are paid late, retention is held or GST and super fall due before payment.
Should tradies take deposits?
Yes, where the job allows it. A deposit covers materials, filters out unserious customers and cuts the amount you carry. Home building has state rules on maximum deposits, so check your licensing body before setting a figure. On commercial work, ask for an upfront payment or an early progress claim.
What are progress payments?
Payments claimed at agreed stages of a job, such as slab, frame, lock-up and completion, rather than one invoice at the end. They match cash coming in to cash going out. Put the stages and amounts in the contract before work starts.
What is security of payment legislation?
State laws that give subcontractors and contractors a faster way to claim progress payments on construction work, usually with strict deadlines for serving claims and responding. Victoria's rules were amended from 15 April 2026. Each state differs, so check the current Act for yours or ask your industry association.
How much should a tradie keep for tax and super?
Enough to cover GST collected, PAYG instalments and any super for staff, set aside as the money arrives. Many tradies move a fixed percentage of every payment into a separate account, based on advice from their accountant. The right percentage depends on your structure and margins.
What finance suits a tradie with a large job and slow payment?
Options include invoice finance against approved invoices, a working capital loan, an overdraft or line of credit from your bank, and supplier trade accounts. Match the product to the gap: a 60-day invoice gap suits invoice finance better than a long-term loan.