Funding for tradies and construction businesses: materials today, payment later

On site at seven, supplier on the phone by eight, invoice out on Friday, and the client pays whenever the client pays. If you work in the trades, you know the pattern: you carry the job’s cost for as long as it takes someone else’s accounts team to press a button. That is a cash problem, not a work problem, and it has well-worn solutions.

Why is cash tight in the trades?

Because the money travels slowly. The usual drags:

• Materials up front. Timber, tiles, cable, pipe and paint are bought before the job is paid.
• Wages and subcontractors. Your crew expects pay weekly, regardless of when the client settles.
• Progress claims. A staged job might pay in four pieces, each after approval.
• Retentions. On some contracts, a portion is held back until completion or defects are cleared.
• Variations. Extra work agreed on site can sit unpaid until the final account.
• Weather and delays. A wet fortnight pushes costs along and payments back.

None of this means the business is unhealthy. It means the business is structurally exposed to timing, and the way to manage that is to fund the gap on purpose.

What do tradies usually fund?

Need	Likely fit
Materials for a large job	Working-capital loan or line of credit
Waiting on progress payments	Short-term loan
A new ute, trailer or tools	Cash-flow loan, lease or property-backed funding; see equipment funding
Taking on an apprentice or crew	See hiring staff
BAS after a big quarter	See BAS and GST gap loans
A larger contract	See big order funding

For trading businesses, unsecured funding is typically $5,000 to $500,000, sized on turnover and bank statements. If you own property, funding from $20,000 to $5,000,000 is available.

How do I size the gap on a job?

Lay out the job week by week. An illustration with no real business: an electrician wins a fit-out requiring $24,000 of materials in the first two weeks, $16,000 of wages across six weeks, and a final payment of $62,000 that lands 30 days after completion. Progress payments cover $20,000 at week three.

The lowest point of cash comes around week five, when materials and wages have gone out and only the first progress payment has come in. The business needs roughly $20,000 to $25,000 to cross the gap, plus a margin. That is the figure to fund, not the whole $62,000 contract.

The Dough gap calculator handles simpler versions of the same sum, using your monthly costs and days to get paid.

How can I speed up payment?

Business.gov.au recommends setting clear payment terms in contracts and invoices, checking customers’ creditworthiness, retaining ownership of goods until paid where appropriate, and asking for deposits. Invoice promptly, and chase early. If a debt turns sour, the same site sets out a staged process, from a reminder to a letter of demand, through dispute resolution, a collector and, finally, legal action.

On larger jobs, the simplest lever is the deposit. A client who pays 20 per cent up front has skin in the game, and your funding need shrinks.

What do lenders look for in a trade business?

• Bank statements showing regular deposits from multiple clients.
• Time trading under the same ABN.
• Customer spread. A mix of clients is steadier than reliance on one builder.
• Tax in order. Lodgements up to date, or a plan if not.
• A clear purpose, whether materials, a vehicle or a hire.

Variable income is normal in the trades, so say so. A line such as “Income peaks in spring and autumn; July is slow due to weather” helps.

What are the common cash traps in the trades?

Some traps catch good tradies again and again.

• Underquoting materials. Prices move between quote and purchase. Build in a buffer or put a validity date on quotes.
• Not charging for variations. Extra work agreed on the spot but never invoiced is a gift to the client. Write it down on the day.
• Chasing the next job instead of the last invoice. An hour on the phone to collect last month’s money is worth more than an hour pricing the next job.
• Spending the GST. The GST on a job is not yours. Park it in the account for the BAS.
• Buying the ute before the work arrives. A shiny vehicle on a long commitment can outlast the work that justified it. Business.gov.au suggests weighing lease against buy before committing.

If any of these sound familiar, you are in good company. The fix is rarely more work, and almost always better timing.

How should I handle tax?

Trades can be hit hard by GST and PAYG after a busy quarter, particularly if the cash from that quarter’s jobs has already gone on materials and wages. The ATO says GST registration is required when turnover reaches $75,000. Set money aside as it arrives: our tax-dough jar guide shows one method.

If you employ people, super must be paid with each wage payment from 1 July 2026 under Payday Super, according to the ATO. Plan for it.

Next step

If a job, a vehicle or a quiet month has stretched your cash, tell us about it. Share the trade, how long you’ve traded, the amount and what it’s for. A lending specialist reads it and rings you. There is no credit check just to ask, and your details are not sent out to a pile of lenders.

Use real figures from your statements and your quotes, and the first conversation can go straight to the options that fit. See if you qualify.