Cash Flow Management for Tradespeople

Cash flow = money in minus money out over time. Profit doesn't equal cash. You can be profitable on paper but broke in the bank if: - Clients pay slowly - You buy materials before getting paid - Big expenses hit before income arrives **Simple rule**: Money in before money out. Always.

Speed up the money coming in: **Take deposits**: 25-50% before starting. Covers materials, confirms commitment. **Invoice immediately**: Same day as completion, not next week. **Easy payment options**: Bank transfer, card, standing order for recurring. **Clear terms**: 7-14 days payment terms, not 30. **Chase promptly**: First reminder on day one overdue, not week two.

Control the money going out: **Negotiate supplier terms**: 30-day accounts mean you get paid before you pay. **Don't over-stock**: Buy materials per job, not "just in case." **Separate accounts**: Business account for business. Don't mix with personal. **Regular review**: Monthly check: what's spent, what's earned, what's outstanding. **Cut carefully**: Know the difference between necessary costs and waste.

Anticipate cash needs: **Seasonal patterns**: Know your quiet months. Save during busy periods. **Big expenses**: Tax, insurance, van replacement. Set aside monthly. **Quote pipeline**: Not all quotes convert. Track conversion rate, plan accordingly. **13-week forecast**: Simple spreadsheet. Expected money in, expected money out, running balance.

Target: 3-6 months of expenses in reserve. **Start small**: £500 is better than nothing. Then £1,000, then one month, then three. **Automate**: Transfer fixed amount to savings when you invoice, not when convenient. **Separate account**: Out of sight, out of temptation. **Use only for emergencies**: Not for slow months or new tools. True emergencies only.