Your turnover looks strong. Where is the cash?

The number on the invoice isn't money yet

You completed work worth five million dollars last year. The accountant's report confirms it. Yet when you check the bank balance, there's barely enough to cover payroll. Suppliers are chasing payment and the tax office wants answers. The business looks healthy on paper but the cash simply isn't there.

Customers who have not yet paid you are your debtors. Suppliers you have not yet paid are your creditors. Between the two sits the working capital you need to keep operating, and when that gap grows too wide, even a profitable contract can leave you unable to pay wages or suppliers on time.

List every dollar owed to you by age

Start with your debtors ledger. Write out every unpaid invoice: the customer name, the amount, the invoice date and how many days overdue it is. Sort them into current, 30 days, 60 days, 90 days and older. The pattern shows you where cash is stuck and which customers are holding your working capital hostage.

If you don't have an aged debtors report, build one today from your invoices and bank deposits. Match each invoice to the payment that cleared your account. Any invoice with no matching deposit is money you earned but haven't received. The total represents cash that should be available but isn't, and that figure explains part of the gap between turnover and bank balance.

Source: Official guidance

Add up your retentions and check the release dates

Retentions are amounts withheld from progress claims, typically held until practical completion or the end of a defect liability period. They appear as revenue in your profit and loss statement because the work has been done and invoiced, but the cash won't reach your account for months or sometimes years.

Go through your contracts and progress claim schedules. Write down every retention amount, the contract that holds it, the trigger for release and the expected date. Total the amounts. If retentions add up to tens or hundreds of thousands of dollars, that's working capital you've funded but can't yet access, and it directly reduces the cash available to pay current obligations.

Check your work in progress figures against actual costs

Assessable income arising from long term construction contracts includes not only progress and final payments actually received in a year but also amounts billed or billable to customers in a year for work carried out. Work-in-progress does not represent trading stock. Work-in-progress is not on hand in the sense contemplated by belong to the client or customer, with the contractor having rights to sue for work done. When your accounting system records revenue for work completed but not yet billed, that figure inflates your reported turnover without adding any cash.

Compare your work-in-progress balance to the cash you've actually spent on labour, materials and subcontractors for jobs not yet invoiced. If the costs are real but the invoice hasn't been raised or paid, you're carrying that job's expenses in your own cash flow. The wider the gap between costs incurred and cash received, the more working capital you need just to keep current jobs moving.

Identify the loss-making jobs and decide what to do

Review each active job and recent completion. For each one, write down the total contract value, costs to date, any variations approved, retentions held and the cash you've received so far. Subtract costs and unpaid supplier invoices from receipts. If the result is negative, that job is consuming cash, not generating it, and no amount of additional turnover will fix that.

A business can show strong revenue while bleeding cash through jobs priced too low, scope creep without approved variations, or cost overruns nobody tracked until it was too late. Today, list the money owed to you by age, total your retentions, compare your work-in-progress to actual spending and identify which jobs are losing money. If the cash pressure is structural and not just a timing issue, contact CRP about turnaround support. The first step is seeing exactly where the cash is trapped, because you can't fix what you haven't measured.