Why is cash flow so important for tradespeople?

Cash flow problems are the number one reason trade businesses fail. You often pay for materials upfront but do not receive full payment for weeks. A profitable business can still go bust if cash runs out before payments arrive.

How should I manage customer deposits?

Taking a deposit (typically 10-25% of the job value) before starting work helps cover initial material costs. For larger jobs, agree staged payments at key milestones - this keeps cash flowing throughout the project.

What is a healthy cash runway?

Aim to have at least 3 months of expenses in the bank. This covers quiet periods, late-paying customers, and unexpected costs. 6 months provides a comfortable buffer. Below 1 month is a danger zone.

How do I improve my cash flow?

Invoice immediately on job completion, take deposits on larger jobs, negotiate 30-day terms with suppliers (instead of paying upfront), use staged payments on projects, chase late payments promptly, and keep a cash reserve for VAT/tax bills.

Should I set aside money for tax?

Yes - put aside 25-30% of profit each month in a separate account for your tax bill. This prevents the shock of a large self-assessment payment in January. Many tradespeople get caught out by not provisioning for tax throughout the year.

TradeCalculator

Cash Flow Calculator

Track your monthly cash position and forecast 90 days ahead

Opening Bank Balance

Monthly Job Income

Customer Deposits

How We Calculate This

Enter your opening bank balance and monthly income streams (completed job payments, customer deposits, staged payments). Then enter all monthly outgoings (materials, wages, van, insurance, overheads, tax provision). The calculator determines your net monthly cash flow, closing balance, and projects the balance forward 90 days to identify potential cash shortfalls.

Frequently Asked Questions

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Last updated: March 2026

All calculations are estimates. Verify with your supplier.