Your numbers shouldn’t give you nightmares

Ghosted by customers? Spooked by your job margins? Worried about the next round of bills? This Halloween, let’s take a few of the scares out of running your business.

Running a trade or construction business means juggling jobs, customers, suppliers and paperwork. When the financial side slips behind, even a full calendar can leave you wondering where the money went.

Three common business frights are unpaid invoices, underquoted jobs and bills you haven’t planned for. Each becomes easier to manage when you know what to check and what to do next.

1. Unpaid invoices: when customers go quiet

You’ve finished the work and sent the invoice. Your suppliers still need paying, but the customer’s payment hasn’t arrived. Sales on a report don’t pay the bills until the cash reaches your account.

Invoice promptly, describe the work clearly and agree on payment terms before starting. Where appropriate, agree on deposits or progress payments so you aren’t funding an entire job yourself. Record variations and have the customer approve them before carrying out extra work.

Review overdue invoices every week. Start with a courteous reminder, follow up with a phone call and record any payment arrangement. Check whether an invoice is disputed or simply missing from the customer’s inbox.

Your next step: Open your aged receivables report. List the five oldest unpaid invoices, the amount outstanding and the next follow-up date for each.

2. Underquoted jobs: busy doesn’t always mean profitable

A quote can cover materials and time on the tools yet still leave too little to run the business. Travel, quoting, administration, equipment, insurance, rework and supervision all consume money or time.

Compare completed jobs with the original estimate. Were the labour hours higher? Did material prices change? Was extra work completed without being charged? Allow for employment costs and business overheads when setting prices, and include a realistic allowance for paying yourself.

A job sells for $10,000 and has direct costs of $8,000. That leaves $2,000 in gross profit: a 20% gross margin, or a 25% markup on direct costs. That $2,000 still needs to contribute towards overheads before you know the final profit.

Illustration only. Figures exclude GST; direct costs include the labour allocated to the job.

Markup and margin measure different things. Confusing them can leave a quote short of your intended return.

Your next step: Review your last three completed jobs. Compare quoted and actual labour, materials, variations and gross profit. Use the results to improve your next quote.

3. Surprise bills: make upcoming commitments visible

The bank balance can look healthy while money is already committed to wages, suppliers, tax, super, loan repayments or insurance. Treating the whole balance as available spending money can create a cash squeeze later.

Build a rolling cashflow forecast for the next 13 weeks. Record when customer payments are realistically expected and when commitments fall due. Include annual renewals, equipment costs and planned owner drawings. Update the forecast weekly as jobs and payment dates change.

Keep a clear record of money allocated to upcoming obligations. A separate account can help with discipline, but the amount to reserve should reflect your actual commitments and forecast.

Your next step: List every payment due over the next four weeks. Compare the total with available cash and expected receipts, then identify any shortfall early.

A simple reset for the week ahead

Chase the cash: follow up overdue invoices and confirm expected payment dates.

Check the jobs: compare three completed jobs with their quotes.

Map the bills: update your cashflow forecast with upcoming commitments.

Choose one improvement: change a quoting allowance, tighten variation approvals or introduce a weekly invoice review.

Key takeaway A busy business can still feel financially uncertain. Knowing what customers owe, what jobs actually earn and what bills are coming gives you a clearer basis for your next decision.

Let’s take the fright out of your numbers.

Allomes Accounting helps tradies and business owners across Newcastle, Lake Macquarie and Maitland understand their costs, review their pricing and plan their cashflow.

If these business frights sound familiar, get in touch to arrange a 15-minute call.