Cashflow Problems in Construction (and How to Fix Them Fast)

Most construction businesses don’t fail because of bad work. They fail because cash runs dry before payments come in.

If you’ve ever been profitable on paper but broke in real life, this is why.

Cashflow in construction is unique — materials upfront, labour ongoing, payment later. A dangerous sandwich.

Here are 5 fixes we implement with construction clients that make an instant difference.

1. Invoice Faster (Same Day if Possible)

If you wait a week to invoice, you’re accepting a week’s delay in payment.

Job finished = invoice. No exceptions.

Systems beat memory every time.

2. Start Using Deposits & Staged Payments

Stop funding materials out of your own pocket.

Construction should never operate like a charity.

A common structure:

30% deposit

30% mid-stage

40% on completion

You’re not a bank. Don’t behave like one.

3. Track Job Profitability Properly

Turnover feeds ego.

Profit pays wages.

For each job track:

• Materials

• Labour

• Subcontractors

• Overheads

• Actual profit margin

It is not uncommon for smaller jobs to make more money than the “big exciting ones”.

4. Ring-Fence Tax Money Monthly

VAT & Corporation Tax should never come as a surprise.

We recommend:

🔹 £ Tax account kept separately

🔹 Weekly bookkeeping

🔹 No dipping into tax pot “just for now”

5. Get Paid Faster With Clear Terms

Payment terms should not be vague.

Make it easy to understand:

Invoices due in X days. Late fees apply.

Add it to quotes. Add it to invoices.

Persistence beats “nice business owner syndrome”.

Want to pay less tax without the headache?

You can download our free guide which will help you save money straight away.

5 Ways to Stop Overpaying Tax in Your Construction Business.

Or book a call if your cashflow needs sorting sooner rather than later.