How to Secure Cash Flow
It’s just criminal – the amount of money that’s owed to tradies.
We asked some tradies how long it took them to get paid and sometimes they took up to 83 days. That is criminal. You need to have these contracts in place that require a deposit up front so you’re never reaching into your profit to pay for that job.
The next stage is to have clear terms set out that you need payment on the day. If it’s a longer project, then you need installments. If you don’t have this stuff set up then you’re going to be another statistic living a stressful life. And trust me, no one will want to be around you.
It doesn’t have to be like that. I used to ask for a 10% deposit with my business. 10% of four and a half grand was only 450 bucks. Then I started getting to a point where my aged receivables was getting a little bit out of control because I wasn’t chasing the money as quickly as I could be. So I changed the deposit to a flatline $1,000.
At the start everyone was convinced it wouldn’t work, but then it just came natural to ask for 1k deposit. Always ask for a heavy deposit at the front – as long as it doesn’t break regulations – so you never mess with your own cash flow.
You don’t want to be dipping into your funds to be able to front someone else’s job. Tell them straight up, payment needs to be paid on the day at the time of installation. If there’s any type of pushback or ignorance or that you get ignored for asking those questions, I guarantee you that they had no intention of paying you straight away – those are alarm bells.
They’re just simple terms – you’re not asking for too much – but they’ll save your business. Don’t be another statistic carrying on someone else’s debt – that’s shrinking you. It’s like a ceiling that’s being placed on you so you can never grow.