If you’re a residential builder in Australia, you’ve probably faced this frustrating reality:

Your business is making a profit. You have plenty of jobs lined up. You’re working hard and growing.

And yet, when you check your bank balance… there’s barely enough cash to cover expenses.

Sound familiar? You’re not alone. Many successful builders find themselves in financial trouble—not because they aren’t making money, but because of cash flow timing issues.

Let’s break down why this happens and, more importantly, how to stop it from crippling your business.


The Cash Flow Problem for Australian Builders

A residential building business operates on delayed cash flow cycles. Unlike retail or service businesses that get paid immediately, builders often pay for everything upfront and only get paid in progress payments over time.

Here’s where things go wrong:

1. You Pay Before You Get Paid

Builders have huge upfront costs—materials, subcontractors, permits, and insurance. These payments are due before you see any revenue from the job. If your next progress payment is delayed (which happens often), you’re stuck covering costs out of pocket.

Example: You start a project in January and pay $50K for materials and labour. But your next progress payment isn’t due until March. That’s two months where your cash is tied up—while your bills keep rolling in.

2. Slow-Paying Clients & Retention Money

Clients, especially developers, take their time paying invoices. Some contracts even include retention money (5-10% of the contract value), which isn’t released until months after the project is finished.

Example: You complete a $300K job, but 10% ($30K) is held back for six months. That’s $30K of your cash, locked away, while you’re trying to keep your business running.

3. BAS, Payroll, and Loan Repayments Don’t Wait

Even if you’re waiting for payments, you still owe money to the ATO, suppliers, employees, and lenders. A profitable business can still go broke if there’s no cash to meet these commitments on time.

4. Too Many Projects Can Create a Cash Crunch

Ironically, growing too fast can sink your cash flow. More projects mean more upfront expenses—before payments start coming in. If you’re not carefully managing cash flow, scaling up can actually push you into financial distress.

5. Cost Overruns & Delays

Unexpected delays (weather, material shortages, council approvals) stretch out project timelines, delaying progress payments while fixed costs (rent, insurance, wages) keep draining cash.

How to Fix It: 5 Ways to Keep Cash Flow Positive

Running a profitable business isn’t enough—you need to control cash flow to stay in business. Here’s how:

1. Improve Cash Flow Forecasting

Most builders don’t realise they’re heading for a cash crunch until it’s too late. Tracking incoming and outgoing cash flow in real time is essential.

Solution: Use JACK App to forecast your cash flow so you know when money is coming in and when you need to cover expenses. No more nasty surprises.

2. Negotiate Better Payment Terms

  • Ask for higher upfront deposits to cover initial costs.
  • Structure more frequent progress payments instead of large lump sums.
  • Negotiate better payment terms with suppliers (e.g., 30-60 day terms).

3. Speed Up Client Payments

  • Invoice immediately when a milestone is reached.
  • Offer early payment discounts to encourage faster payments.
  • Follow up firmly but professionally on overdue invoices.

4. Plan for Retention Money

Since retention money can’t be accessed for months, don’t count on it to cover expenses. Instead:

  • Set retention payments aside in a separate bank account so it doesn’t affect cash flow.
  • Negotiate lower retention percentages if possible.

5. Keep a Cash Reserve

A 3-6 month cash buffer can help cover shortfalls when payments are delayed. Even if your business is growing, avoid withdrawing too much profit too soon.

Final Thoughts: Cash Flow is King

A profitable business can still fail if cash isn’t managed properly. Builders in Australia need to think beyond profit margins and focus on cash flow forecasting, smarter payment structures, and financial discipline.

That’s exactly what JACK App is built for—helping builders track cash flow, forecast payments, and stay ahead of financial pitfalls.

Want to stop the cash flow stress? Book a DEMO and Try JACK App for free for 2 weeks and take control of your business finances.