Cashflow in a Slowing Construction Market

Conditions in residential construction have changed over the past few months. Detached house approvals fell 5.3% in the latest ABS building approvals figures, the Reserve Bank has lifted the cash rate for the fifth consecutive time, and consumer confidence and business sentiment are at their lowest readings in a long time. For a construction business, fewer approvals mean fewer new jobs coming into the pipeline, and higher rates mean clients are often taking longer to commit to new work and to pay for work already done.

When the pipeline thins, overheads stay largely the same while revenue from new work falls, and builders competing for the jobs that remain often price them more tightly. The result is less margin on each job and less room in the bank account, while progress claims, retentions, wages and supplier payments continue on their usual schedule. A clear view of cash and job margins is the first part of the answer, and changes to claiming, job costing, pricing and payment terms are the second part.

In this masterclass, Phil Brown and Dan Wilkinson will show you how to get a clear view of your cash position and job margins as the market slows, and work through the changes that help protect cash and margin through a tougher period.

Our recent article, Australia’s Residential Construction Slowdown: What It Means for Construction Businesses, sets out the market data behind this session in more detail.

What the session covers

• What falling approvals, higher interest rates and a softer market mean for cash flow and margins, and where we sit in the cycle.
• Why your profit in Xero reporting disagrees with your cash position, and how claiming, variations and payment terms decide when cash arrives and when it leaves.
• How to plan for a quieter pipeline, the Christmas shutdown and clients who are slow to pay.
• How to model what you owe the ATO and how to manage your obligations more strategically
• Working capital finance: getting your timing right and pitfalls to avoid when taking on debt
• The impact of a tighter cash position on your builders licence
• How to get crystal clear visibility on your cash position – including a free construction cashflow template.

Who the session is for

The session is for owners and managers of building, trade and construction supply businesses who want a clearer picture of their cash and margins and a plan for a tougher year ahead. No finance background is needed.

Your free resource

Everyone who registers will receive the 13-Week Cashflow Forecast Template after the session, so you can start mapping your own numbers straight away.