Cash Flow Management Tips for Tradies

Cash Flow Management Tips for Tradies

Tradies are the foundation of many industries in Australia, and managing cash flow is of utmost importance when running a business. The following cash flow management tips will ensure tradies stay on track with their finances while keeping their business running smoothly.

Create a Cash Flow Forecast

Creating a cash flow forecast is essential for any tradie who wants to stay on top of their business’ finances. A cash flow forecast is a projection of the future cash flow of your business, which shows you how much money is coming in and going out during a certain period of time. This will help you identify any potential cash flow problems, such as not having enough money to pay for materials, wages or other expenses.

The forecast should include all expected sources of income, such as jobs, invoices, and payment plans. It should also include all expected expenses, such as rent, wages, materials, taxes, and any financial obligations. With a detailed cash flow forecast, you can plan ahead and prepare for any potential cash flow issues or unexpected expenses.

Manage Invoices

Invoices can be a major source of income for tradies, but they must be managed correctly to ensure a consistent cash flow. Sending invoices on time is essential, as it’s important to get paid as soon as possible. Be sure to include all necessary information on the invoice, such as the job description, payment terms, and contact information.

It’s also important to follow up on any unpaid invoices. Consider setting up a system to track and remind you to follow up if payment is not received on time. This will help you stay on top of your accounts receivable and ensure you get paid for the work you do.

Set up Payment Plans

For tradies who have to purchase expensive materials or equipment, setting up payment plans can be beneficial. Payment plans allow you to spread the cost of a purchase over a period of time. This can help you manage your cash flow and ensure that you have enough money to cover the costs.

You can also set up payment plans with clients if they are unable to pay the full amount upfront. This can be beneficial for both you and the client, as it allows them to pay in instalments while ensuring that you get paid for the work you do.

Track Expenditures

Tracking your expenditures is key to keeping your cash flow under control. Be sure to keep track of all expenses, such as materials, wages, rent, taxes, and any other financial obligations. This will help you identify any areas where you can save money and ensure that you are not spending more than you need to.

Having a budget can also be helpful in this regard. A budget should include all expected monthly income and expenses and should be reviewed regularly. This will help you stay on top of your finances and ensure that you are not overspending.

If you need assistance managing your cash flow, call Griffiths Advisory. Our experienced team of accountants can provide guidance and advice on cash flow management and other financial matters. Contact us today to find out how we can help.

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Phil Griffiths

Phil Griffiths

Bachelor of Commerce
Certified Practising Accountant
Diploma in Financial Planning
Professional Certificate in SMSF
Approved SMSF Auditor

Phil has been the Managing Director of Griffiths Advisory for 29 years, combining his expertise in taxation, business advisory, superannuation, negative gearing, and wealth creation. He also loves an active lifestyle, indulging in surfing, cycling, snowboarding, and spending quality time with his wife and two children.