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Everything you need to know to master your cash flow in 2024

Another new year brings fresh opportunities and challenges in equal measure for trade businesses. While political and economic uncertainties look set to continue causing market fluctuations, tight cash flow control remains essential for stability.

By regularly reviewing and refining financial processes now, you can strengthen resilience against unpredictable payment delays or material price hikes this year.

Streamline Billing Cycles

Invoice speed plays a huge role maximising cash flow through your accounts. You can optimise payment turnover by:

Issuing Invoices Rapidly

Compile all job documentation and get invoices signed off and sent within 24 hours of project completion. This faster chasing converts work into payable balances before clients get distracted.

Offering Instant Invoices

Consider emailing instant digital invoices before even leaving sites following small jobs like emergency callouts. This convenience prompts rapid settling up from appreciative homeowners.

Adding Incentives

Offer small discounts like 5% off for payment within 5 days of invoicing. This cost-effective prompt nudges procrastinating individual customers into prioritising your payments.

Enforcing Contract Terms

For larger construction projects, ensure contract schedules clearly outline staged invoice issuance and payment dates aligned to project milestones. 

Automate Chasing Processes

Even with optimised invoicing, some clients inevitably miss due dates. Staying on top of late payments prevents cash shortfalls by:

Using Auto-Reminders

Set invoice software to automatically email initial polite payment reminders 5 days after due dates, removing manual admin.

Charging Late Fees

Clearly indicate on quotations and invoices additional fees applying after 14 days without payment. Be transparent so clients understand the consequences.

Carefully Vet New Clients

Check customer credibility before getting tied into major contracts to minimise bad debt risks. Verify identities using:

  • Social Media Checks – Scan potential new clients’ Facebook profiles and Twitter accounts assessing professionalism. Alarm bells include rants badmouthing past tradesmen!
  • Credit Checks – Use agencies providing company director credit reports to check County Court Judgments or bankruptcies suggesting higher bad debt risks.
  • Deposit Requirements – Request down payments upfront before beginning large jobs to demonstrate commitment. Particularly important assessing unfamiliar private homeowners.
  • Trade Association Membership – Check if commercial customers show affiliation with trade bodies that require vetted approved status. This indicates stability.

Monitor Cash Reserves Closely

With inflation and material costs seesawing, cash reserves prevent missed opportunities. Strategically build reserves by:

Updating Prices

Review service pricing yearly to factor in rising overheads and avoid compromising quality with cuts. Incremental increases preserving margins are smarter.

Valorising Stock

Carefully balance material inventory levels. While excessive stock ties up cash, lean buffers risk project delays when supply chains falter.

Claiming Tax Reliefs

Before tax years close, submit legitimate expense claims around tool costs, training, uniforms and more to maximise deductible write-offs. Every saving counts.

Securing Finance Options

Even the savviest cash flow controllers encounter unexpected shortfalls. Have backup financing arranged before emergencies strike by:

  • Agreeing Overdrafts – Negotiate overdraft limits delivering flexible access to extra funds. This is much cheaper than exhausting credit cards when bills briefly exceed balances.
  • Opening Credit Lines – Explore trade credit schemes from builders and plumbers merchants that allow you to delay settlements for materials on account.
  • Researching Loans – Understand loan and financing options available should disasters like machinery breakdowns or vehicle crashes require urgent access to capital.

Compare Trade Insurances

Here at Tradesman Saver, we know that running your own trade business comes with all kinds of financial challenges and risks. That’s why we offer tailored tradesperson insurance packages designed specifically to protect you, your livelihood and your hard-earned assets.

Tradesman Talk

What tactics will you use to maximise cash velocity and financial fitness in your business this year? Are you finding rising overheads squeezing previous comfortable margins? Share your money mastering tips and 2024 forecasts below!

Until next time, make sure it’s Tradesman Saver.

Dean Laming

Dean Laming is a Chartered Insurance Broker with more than 25 years insurance experience. Through various underwriting, operational and management roles, Dean has built up extensive knowledge of how to run a business and is now Managing Director of Tradesman Saver, part of the wider Henry Seymour Group.

All articles by Dean Laming

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