Simple cash flow tracking for tradespeople and small businesses

A month full of jobs does not guarantee a comfortable bank balance. Between buying materials, waiting for clients to pay and fixed bills landing on set dates, cash flow can be tight even when business is good. Here is a simple routine, about half an hour a week, to see problems coming instead of discovering them on the day a payment bounces.

Revenue and cash are not the same thing

Revenue is what you have invoiced. Cash is the money actually available. Between the two sit payment delays, materials paid in advance and bills that fall on fixed dates.

A typical example: you win a large job in March, buy materials in April, finish in May and get paid in June. On paper, March looks excellent. In the bank, April and May are the hardest months.

Three numbers to check every week

Pick a fixed slot, say Monday morning, and write down:

1. 1your bank balance today;
2. 2the total of invoices sent but not yet paid, with the overdue ones separated;
3. 3the certain outgoings in the coming weeks: suppliers, rent, insurance, loan repayments, taxes.

Those three numbers answer the question that matters: "If nobody paid me from today, how many weeks could I last?"

A simple eight to twelve week forecast

A spreadsheet with one column per week is enough. For each week:

• money in: expected payments, dated by each invoice's real due date, plus deposits from accepted quotes;
• money out: known bills plus an estimate for materials on planned jobs;
• at the bottom, the expected closing balance.

Be cautious with money in: date each payment on its due date, not on the day you hope to receive it. If a client usually pays two weeks late, move their payment two weeks later. The aim is to spot, in advance, the week the balance drops below your comfort level.

Set an alert threshold

Choose a minimum you never want to go below, for example one month of fixed costs. When the forecast shows you crossing it, you have several weeks to act rather than a few hours.

Speed up the money coming in

Before looking for an overdraft or a loan, look at how quickly you get paid. That is usually where the gap comes from.

• Ask for a deposit on material-heavy jobs; our guide on asking for a deposit explains how.
• Invoice on the day the job ends, not at the end of the month.
• Split long jobs into stage payments.
• Make your terms clear on every quote and invoice; see invoice payment terms.
• Follow up the day after the due date, then a week later; our guide on chasing late payers has the wording.

Control what goes out without slowing down

On the spending side, three simple levers:

1. 1Negotiate supplier terms: a trade account with your usual suppliers can give you a few weeks of breathing room.
2. 2Buy for signed jobs, not for stock: materials on a shelf are cash you cannot use.
3. 3Set aside tax money as soon as you are paid, in a separate account. That money is not really yours, and spending it creates the most painful gaps later.

Summary: your weekly cash routine