Practical insights for trades and construction business owners — invoicing, Security of Payment, and a 13-week cash flow forecast you can build in an afternoon.
If your business is profitable on paper but you’re still sweating over the bank balance, you’re not alone. In construction, the money you earn and the money you actually have are two very different things — and right now, that gap is wider than it’s been in years.
The numbers behind the squeeze
Construction consistently accounts for around 27% of all company insolvencies in Australia — more than any other sector. The failures are almost never demand failures. They’re cash flow failures. Businesses doing the work, just not getting paid for it fast enough.
The pressure has intensified through 2026. New tax debt default disclosures for construction businesses spiked 49% in the first quarter alone, and trade payment delays worsened over the same period. Fuel costs jumped sharply in March, with diesel up around 41% in a single month, and for anyone locked into fixed-price contracts, that hit went straight off the bottom line. Rising interest rates have made holding work-in-progress more expensive, and the new Payday Super rules that kicked in on 1 July removed the short-term cash buffer many builders quietly relied on.
Why profitable trades still run dry
The problem is structural. Wages go out weekly. Materials often need paying within 30 days. Customers can take considerably longer. Retentions lock up 5 to 10% of contract value for a year or more. On $10 million of annual contract value at 5% retention, that’s half a million dollars sitting outside your bank account at any given time.
Then there’s the paperwork gap. A progress claim submitted three days late on a monthly cycle can push hundreds of thousands of dollars of receipts a full month. Every day between finishing a job and issuing the invoice is a day of free financing you’re handing to your client.
Practical moves that actually work
Invoice from site. Send the invoice the same day the work is done — ideally before you pack up. Clients prioritise recent invoices. A job finished two weeks ago feels less urgent to them than it does to you.
Use short, clear terms. Net 7 is standard for most residential trade work. Net 30 is for large commercial jobs only. Put the due date in bold on every invoice, and include a payment link or PayID so paying takes seconds, not a trip to the bank.
Ask for deposits and progress payments. For any job over a few thousand dollars, 20 to 50% upfront is reasonable and standard. For multi-week projects, invoice at milestones — rough-in, completion, handover — rather than one giant invoice at the end.
Chase at 7 days overdue, not 30. A friendly nudge on day one or two is far more effective than a firm demand on day 30. Most late payments are oversight, not avoidance.
Get your variations signed. Every change of mind that costs you time should cost the client money — in writing, before the work starts.
Know your Security of Payment rights
If you’re doing building or construction work, you have statutory rights that go well beyond a standard invoice. Security of Payment laws in every state let you serve a formal payment claim and, if it’s ignored, move to adjudication — a fast-track dispute process that doesn’t require going to court.
The rules differ by state, so check yours. In Victoria, major changes took effect on 15 April 2026: payment terms are now capped at a maximum of 20 business days, the window to make a claim extended from 3 months to 6 months, and you can now claim release of retention money rather than simply waiting for it. In NSW, a payment claim to a head contractor for residential work is due within 10 business days; for non-residential, 20. Queensland caps commercial building contracts at 15 business days.
The key is serving the claim correctly — identifying the work, stating the amount, and noting that it’s made under the relevant Act. Get that right and the clock starts ticking on the other party.
Build a 13-week cash flow forecast
A 13-week cash flow forecast is the single most useful tool a trades business can run. It shows you, week by week, when money comes in and when it goes out — so you’re never surprised by a shortfall. Most owners only look at the bank balance. A forecast looks ahead, which is where the real decisions live. Here’s how to build one in an afternoon.
- List every dollar coming in. Go through your current jobs and write down what each client owes you, and when it’s due. Include deposits, progress claims, and retentions you’re expecting back. Be conservative — if a client usually pays late, assume they will.
- List every dollar going out. Wages, materials, fuel, plant hire, insurance, loan repayments, BAS, super. Put each one in the week it actually leaves the account, not the week you remember it.
- Net it off, week by week. For each of the 13 weeks, subtract outgoings from incomings. A negative week is a problem you can solve now — by chasing a payment, delaying a purchase, or drawing on a facility — instead of discovering it when the account’s already empty.
- Update it every Monday. Spend 20 minutes adjusting for what actually happened last week. The forecast only stays useful if it reflects reality, not last month’s plan.
The goal isn’t a perfect spreadsheet. It’s a habit that keeps you ahead of the money instead of chasing it.
A few habits that compound
- Track retentions per job and review them quarterly. Money you forget to claim is money you never see.
- Watch the predictable tax calendar — BAS, PAYG instalments, super, and the 28 August TPAR deadline all land on fixed dates. Set money aside as you earn it.
- Vet new clients. A client who refuses a deposit on a $5,000 job is telling you something.
The bottom line
Cash flow isn’t a finance problem. It’s a survival problem. The trades businesses that make it through 2026 aren’t necessarily the ones with the most work — they’re the ones who invoice fast, claim what they’re owed, and treat getting paid as seriously as doing the work itself.
If your numbers feel foggy or your cash flow feels like a rollercoaster, that’s exactly what we help trades and construction owners fix. Get in touch and we’ll help you take control of the money side of the business.
Next Level Accountants
High-performance accounting and strategy for trades and construction businesses.
Level 1, 4–6 Gilbert Street, Torquay VIC 3228
