There's a version of a trade business that's profitable on paper and broke in the bank account, and it's more common than anyone admits. The jobs make money. The margins are fine. And yet every fortnight is a scramble to make payroll, because the business is constantly floating tens of thousands of dollars of other people's work, waiting to get paid back for materials and labour it laid out weeks ago.
Most owners try to fix this by chasing invoices harder. Faster reminders, firmer follow-ups, an accountant on the phone. That helps at the margins, and we've written the full playbook for it in What to Do When a Client Doesn't Pay. But chasing is treating the symptom. The disease is structural: the money is arriving too late in the job, sometimes long after you've already paid for everything. The real fix isn't collecting faster. It's changing when the money is due, so you're never the one funding the work.
The problem is you're acting as your customer's bank
Walk through a typical job. You win it, you order materials and pay the supplier, maybe on 30-day terms if you're lucky but often up front. You put your people on it and pay them each week or fortnight, no delay there. The job finishes, you invoice, and the customer takes their sweet time, another 30, 45, 60 days.
Add that up and you've paid for the entire job, materials and wages, weeks or months before a single dollar of the customer's money lands. For that whole stretch you are, in effect, lending the customer the full cost of their own job, interest-free, out of your working capital. Do that on three or four jobs at once and you've got a large, permanent hole in your cash position that never closes, because as one job pays out, the next one opens up. You're not short of profit. You're short of cash, because your cash is always out on loan.
The businesses that never feel this aren't more profitable. They've just stopped being the bank.
Deposits: get materials off your books before you order them
The first and simplest fix is a deposit taken before the job starts, sized to at least cover your materials and up-front costs. For a lot of trade work, 20 to 50% up front is completely normal and completely reasonable, and customers expect it far more than nervous owners assume.
The logic is straightforward. If the customer's deposit covers the materials, then you order and pay the supplier with their money, not yours. You've removed the single biggest up-front lump you were carrying. You're now only ever exposed for the labour as it happens, not the whole job cost sitting on your card for a month.
The reason most tradies don't ask for a deposit isn't that customers refuse. It's fear, the same fear that drives underpricing, that asking will cost them the job. It almost never does. A deposit is standard practice, it signals a real business rather than a bloke who might vanish, and the customers who balk hard at a reasonable deposit are frequently the exact ones who'd have been slow or difficult to pay at the end. The deposit quietly filters them out before they cost you anything.
Gold nugget. Make the deposit a condition of the booking, not a request you make after you've won the job. The wording matters. "We'll need a 30% deposit to lock in your spot and order materials, then progress payments as we go" said at the point of accepting the quote lands completely differently from ringing up two days later asking for money. In the first version it's just how you work, stated plainly like your hourly rate. In the second it sounds like you're short of cash. Same money, opposite impression. Build the payment structure into the quote itself so the customer agrees to it when they agree to the job, and you never have to have an awkward conversation about it again.
Progress payments: don't carry a long job to the end
Deposits solve the up-front lump. Progress payments solve the long middle. On any job that runs more than a week or two, waiting until the end to invoice means you're funding weeks of your own labour before you see anything, and you're carrying the risk that something goes wrong right at the end and the whole payment is in dispute.
The fix is to break the job into stages and invoice at each one. Rough-in complete, invoice. Fit-off complete, invoice. Final, invoice the balance. Now the customer's money flows in alongside your costs going out, roughly in step, instead of arriving in one lump long after. Your cash position stays close to flat through the job instead of plunging deep into your own pocket and slowly climbing back out.
This also does something quieter and valuable: it caps your exposure on any single customer. If a client is going to turn out to be a non-payer, a staged structure means you find out at stage one, when you're owed a fraction of the job, not at the end when you're owed all of it and you've already spent everything delivering it. You stop work, you're barely out of pocket, and you've dodged the disaster. Structuring payments this way is one of the cleanest forms of risk management a trade business has, and it costs nothing to put in place.
You often have a legal right to progress payments
Here's something a lot of trade business owners don't realise: on construction work you frequently don't have to negotiate the right to progress payments, because the law already gives it to you.
Every state and territory in Australia has security of payment legislation for the building and construction industry, and a core feature of it is a statutory right to progress payments, which in most cases exists whether or not your contract even mentions them. The legislation differs a little between states, but the intent is the same everywhere: to stop contractors and subbies being left carrying the cost of work they've done while they wait to be paid, and to give them fast, cheap avenues to recover money that's owed. If you do construction work and you're routinely waiting until the end of long jobs to invoice, you may be leaving a right you already have completely unused. It's worth a conversation with your accountant or a construction lawyer about how the act in your state applies to the way you work.
This is the same problem your forecast is trying to show you
Deposits and progress payments aren't a billing preference. They're the single biggest lever most trade businesses have over their own cash position, and they work by fixing the timing of money at the source rather than chasing it after the fact.
If you've built a 13-week cash flow forecast and it keeps showing a squeeze six weeks out no matter how busy you are, this is very often the reason: the work is profitable, but the money is arriving too late in each job to keep the account healthy in between. Restructuring when you invoice, deposit up front, progress payments through the middle, balance at the end, moves that whole curve and can turn a business that's always tight into one that's comfortable, without winning a single extra job or raising a single price.
That structural look at your cash, where it goes out, when it comes back, and how to close the gap, is exactly what we work through in the Trade Business Health Check: a fixed-price review of your numbers, with a written plan of what to fix first. For a lot of trade businesses, the fastest win on that list isn't more sales. It's simply getting paid at the right time.