Most building company owners started as tradespeople. They're good at building things. They didn't get into this industry because they enjoy cashflow forecasting or reconciling accounts. But cash flow is what keeps the business alive between progress claims, and it's where most of the stress comes from.
Why Cash Flow Hits Builders Differently
Construction has a unique cash flow pattern that doesn't exist in most other industries. You pay for materials upfront. You pay wages weekly. You pay subcontractors on 30-day terms. But you receive payment in stages, often 30-60 days after submitting a claim. The gap between money going out and money coming in is where businesses get into trouble.
This isn't a problem you can solve by working harder. It's a structural challenge that requires visibility. You need to see, clearly and regularly, what's owed to you, what you owe others, and when both of those things are due.
Three Things to Track Weekly
Forget complex cashflow models. Start with three numbers, reviewed every Monday morning:
- Claims submitted but not yet paid. This is money owed to you. Know the total, know the age of each claim, and follow up on anything over 30 days.
- Committed costs not yet invoiced. These are purchase orders and subcontract agreements where the work is underway but the bills haven't arrived yet. This is money you will owe soon.
- Cash position versus upcoming payroll. Can you cover the next two pay runs without relying on a claim being paid on time?
The Tool Doesn't Matter. The Habit Does.
You can track this in Xero, in a Google Sheet, or on the back of a napkin. The tool is irrelevant. What matters is that someone in your business looks at these three numbers every single week. If you're using Xero or MYOB, the data is already there. You just need to surface it in a format that takes five minutes to review, not five hours.
If your accounting software and job management system are connected, this becomes even simpler. One report, auto-generated, sitting in your inbox Monday morning. That's the goal.