Attention Builders, what is your system for positive cash-flow?

What is Your System For Positive Cash-Flow?

I recently worked with a builder who a few years ago made the move from working as a sole trader with one labourer doing smallish jobs to building a small team and working on bigger residential renovations and additions.

At first the growth was slow but eventually things started
to snowball as more referral work came in. He soon found
himself with seven or eight jobs on the books and doing more
turnover than he’s ever dreamt of, except he was in financial hell.

Money was going out faster than it was coming in and although he was pricing his work right with a solid 27% margin, there was no money in the bank account. He was either hemorrhaging money somewhere or there were significant
Cash-flow problems. All I wanted was the truth, so the first thing I did was book a time to sit down with his accountant and have a Close look at the numbers. Lets face it the numbers don’t lie and we all know the old adage “The truth will set you free”. I’ve done this on a number of occasions with clients but on this occasion something wasn’t quite right. First of all at the meeting the accountant looked really nervous, not a good sign!

I was struggling to understand the complexity of some of the
Financials and whenever I asked a straight question like what is the
WIP? Or what is the current cash position? Can we look at the
Gross margin on individual jobs and compare? I got a blank stare,
I think “stunned mullet’s” the term.

Long story short, there was a massive “Cash Gap” in the guys business,
things were moving too quickly, accurate financial were non existent and
they were flying blind. The end result almost wasn’t pretty, luckily we were able to make some adjustments and get him back on the right side of the line.

There are two important lessons here, firstly you need accurate numbers
And financial controls otherwise you risk crashing hard, even in good times. Also choose your bookkeeper and accountant wisely. I don’t have time to go into detail on this now but I’ll be sending out something in the coming weeks so watch his space.

Secondly; do you have a solid strategy for ensuring your money comes in before it goes out? That is a system for ensuring positive cash-flow? If you can relate to any of this and would like a free copy of the 21 Cash-flow strategies for your business enter your name and email address on the Builders Coach home page at