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Top 7 Reasons Why Tradies Struggle for Cash

Poor cash-flow is one of the biggest problems in trade businesses and the most common reason for any business to go under. In order for your business to stay on top you need more money coming in than going out – so you’ve got cash for materials, to pay subbies, make your monthly vehicle repayments etc. etc., and pay yourself.

The reasons you’re struggling are more than likely to be due to one or more of the following….

1. Not Sending Out Your Invoices

You need to be paid but if you don’t send out your invoices you won’t be. If you’re already staying up late at night or losing your weekends to invoicing (when you’d rather be at the pub with your mates, or playing footy with the kids) then have a look here for some tips to get you back on top….

2. Late-Payers

Overdue invoices are another major problem for most trade businesses since most of us hate chasing money. (As a bookkeeper, I actually quite like it!) However, it’s a necessary evil when we have slow-payers. Often invoicing terms are also too long to maintain good cash-flow e.g. 30 days when they could be 7 days.

3. Too Many Hours You’re Not Paid For

Lots of tradies spend hours in the car each day driving to and from, or between job sites. Then there’s all the unpaid time spent looking at new work, drafting quotes and doing your bookwork. Add to that phone calls through the day, or issues with employees and there’s may not be many hours left to be on the tools.

4. Too Many Employees?

Employees are often the biggest cost to any business, so think carefully before taking on anyone new. There’s the actual cost of hiring new people i.e. their wages and superannuation, but also the hidden costs i.e. time spent training them.

For example, I recently started working with a business with 5 employees including the business owner. The business owner thought that without the other 4 employees the business wouldn’t make as much money since it couldn’t take on as much work. While that was true, they didn’t realise the cost of more employees was more than the extra money they brought in. The business would actually be more profitable with fewer employees and less work.

Having said that, there are other ways to deal with this – by increasing your pricing, for example…..

5. Not Charging Enough

Too many tradies run their business without properly understanding their costs so they have no idea how much money they need to make. They just charge the same as their mate who’s also in the industry.

To work out how much to charge to make a profit (so your business will survive in the long-term) you need to know your numbers. Here’s a link to help get you started with this….

6. Poor Supplier Terms

Another big cost for trade businesses is purchasing materials, so your suppliers give you reasonable terms to pay otherwise this will also impact your cash-flow.

7. Sloppy Bookkeeping

It’s impossible to know where your business is at if you’re not up-to-date with your bookwork. This is crucial, not only for understanding how your business is going but to meet your regular tax obligations, such as lodging your BAS’ and tax returns on time.

P.S. If you are struggling with any of these issues get in touch NOW at or 0424 467 921 so cash-flow is no longer a stress
for you.