How Trades Business Owners Keep $50,000 in the Bank at All Times

Most trades business owners are great at their job.

They show up. They do the work. Customers are happy.

But the bank account? It never seems to grow.

Here is the truth. Having money in the bank is not about how much you make. It is about how fast money comes in versus how fast it goes out.

The problem most trades businesses have

You finish a job on Monday. You invoice on Friday. The customer pays three weeks later. But your guys needed their cheques on Thursday. Your supplier needed payment last week. Your truck payment came out Tuesday.

That gap between doing the work and getting paid is what drains your account. Intuit found that 61% of small businesses say cash flow problems have threatened their survival. In the trades it is even worse because jobs are big and payments are slow.

Here is how to fix it

Step 1: Invoice the same day the job is done. Not tomorrow. Not Friday when you get to the office. The same day. Every day you wait is a day you are lending the customer money for free.

Step 2: Collect a deposit before you start. 30% to 50% upfront is standard. Most good customers will not blink. The ones who refuse are usually the ones who end up not paying anyway.

Step 3: Follow up on unpaid invoices at 7 days. Not 30 days. Not when you remember. Seven days. A study by FreshBooks found that invoices followed up within a week are three times more likely to get paid than ones left for a month.

Step 4: Build a cash reserve and protect it. Take 10% of every payment and put it in a separate account. Do not touch it. This is your buffer. After a few months you will have enough to cover a slow week without stress.

Step 5: Know your number. What does it cost to run your business for one month if zero jobs come in? That is your number. Payroll, insurance, fuel, payments, everything. Write it down. Your goal is to always have at least two months of that number sitting in the bank.

The simple version

Get paid faster. Save a little from every job. Know what it costs to keep the lights on. That is how trades business owners keep money in the bank no matter what month it is.