Your phone keeps ringing but the bank stays empty

Activity is not the same as profit

The phone never stops, another quote goes out and the truck leaves for the next job. At the end of the month there is still no cash and the suppliers want payment this week. A busy trade business can run out of money just as quickly as a quiet one.

The difference between revenue and profit matters more than the size of the job list. Work that does not cover its real cost drains the business, no matter how many hours it fills. The useful question is not how many jobs you have booked. It is whether each one leaves money in the account after wages, materials, plant and overheads are paid.

Check what you charge against what each job costs

ATO small business benchmarks for the 2023–24 year show construction trades with expenses ranging from 48 per cent to over 80 per cent of turnover, depending on trade and scale. If your pricing does not account for labour, materials, plant hire, waste, supervision, rework and allocated overheads, the gap becomes a loss you carry between jobs.

Collect the invoices, timesheets and hire receipts for three recent jobs and compare the total cost against what you charged. Include your own hours at the rate you would pay someone else to do the work. If the margin is smaller than you expected, the price was wrong or the job ran over budget. Either problem needs a different fix.

Source: Official guidance

Look at your payment terms and how often you chase debts

Setting clear payment terms can help you get paid on time, which helps you manage your cash flow. If you finish the work, send the invoice three weeks later and wait another month to follow up, the cash sits with the customer while your own suppliers expect payment on their terms. Late payments affect cash flow of the business owed the outstanding debt, forcing them to find ways to finance the shortfall in their working capital; a lack of cash flow is the leading cause of business insolvency.

Always invoice when the job is complete, and review your payment terms – they don't always have to be 30 days. Write down who owes money, how long each account has been overdue and what follow-up has been attempted. Debts older than 60 days need a clear next step, not another promise to chase them later.

Cut work that does not pay

Some customers pay late, dispute invoices, ask for discounts or change the scope after the quote is agreed. If the same customer creates the same problem on every job, the work is costing more than the invoice recovers. A full schedule that includes loss-making jobs is worse than a shorter one that delivers profit.

Review which customers pay on time, accept quotes without renegotiating and allow you to complete work without repeated call-backs. Then compare the margin and payment history for the rest. Walking away from unprofitable work is a commercial decision, not a failure. Saying no to the wrong job protects cash for the work that pays.

Decide what to do next

Start with the job costings, debtor list and payment terms you use now. Write down what each one shows and where the biggest cash leak sits. If pricing is the problem, fix the estimating process before the next quote. If payment terms or debtor follow-up need work, set a stricter process and use it consistently.

CRP works with trade and construction businesses dealing with cash pressure, unprofitable work and turnaround challenges. The team coordinates independent qualified professionals who can assess the commercial position and explain the available options. Use the contact form to describe your situation. This article offers general guidance, not legal, financial or insolvency advice.