Getting Your Cash Flow Right for Major Projects: A Guide for Builders & Tradies

Managing cash flow for major construction projects isn’t just about watching your bank balance—it’s about planning, tracking, and staying ahead of costs. Whether you're a builder, tradie, or contractor, having a clear financial strategy ensures you can deliver projects on time and within budget without running into cash flow crunches.

Coming from a decade as a Production Accountant in the film industry, I’ve managed the finances for projects ranging from $400K to $15M—and construction accounting is no different. Success depends on a fully itemised budget, a finance plan, a cash flow and drawdown strategy, and milestone-based cost reporting. Without these, it’s easy to overspend in areas you shouldn't.

Key Elements of Cash Flow Management for Major Projects

1. Build a Fully Itemised Budget

A project budget needs to cover every cost—materials, labor, subcontractors, permits, and unexpected expenses. A well-structured budget acts as your financial blueprint, keeping spending in check.

2. Create a Finance & Drawdown Plan

Most construction projects rely on staged payments, whether through progress payments from clients, bank loans, or other financing. Mapping out when funds will be available ensures you have enough liquidity to meet costs as they arise.

3. Track Cash Flow & Variances Period to Period

I’ve worked extensively with Xero to manage real-time financial tracking. One of the most effective ways to stay on top of your finances is by creating functional reports that track variances from period to period. This helps you see if costs are creeping up before they become a problem.

4. Factor in Payroll Obligations (The Hidden Cash Flow Killers)

A major pitfall for many builders and tradies is not planning for payroll liabilities. It’s not just about wages—you also need to budget for:

• Employee annual leave

• Superannuation

• PAYG tax

Failing to account for these can lead to cash shortfalls that put pressure on your business.

5. Use Milestone-Based Cost Reporting

Rather than relying on the bank balance as an indicator of financial health, milestone cost reporting gives a clearer picture of how much of the budget has been spent versus how much work has been completed. This prevents overspending and helps ensure there’s enough cash to finish the job.

Stay in Control of Your Finances

Proper cash flow management isn’t just about avoiding financial stress—it’s about maximising profitability and keeping your projects on track. If you’re looking for expert bookkeeping support and financial strategy for your construction business, I can help.

Want to get your numbers right? Let’s chat.