Why your trade business shows profit on paper but no cash in the bank (and how to fix it)

You’re working flat out, the jobs keep rolling in, and your books show you’re making a profit. But when you log into your bank account… there’s nothing there. Bills are piling up, the BAS is due, and you’re wondering how a “profitable” business can feel so broke.

This is one of the most common frustrations I hear from tradies. And the truth is, it’s not your fault. Most trade and maintenance business owners were never taught the difference between profit and cash flow. Let’s break down what’s really going on and how to fix it.

Profit vs. cash flow: What's the difference?

• Profit is what’s left when you subtract your expenses from your income on paper.

• Cash flow is the actual movement of money in and out of your bank account.

You can show profit in your books because jobs are invoiced and sales look good, but if that money hasn’t hit your account yet or it’s already been chewed up by bills, wages, or loan repayments, your cash flow is under pressure.

Think of it like quoting a big job, sending the invoice, and marking it down as income. On paper, you’re up. But until the client pays (and you’ve set aside tax, wages, and supplier costs), you don’t have that money.

Why tradies end up in this position

Here are the four most common reasons I see in trade businesses:

1. Unpaid invoices - Clients drag their feet, and you’re effectively bankrolling their project.

2. Stockpiling materials - You’ve spent upfront, but payment is weeks away.

3. High debt repayments - That new ute or equipment eats up cash every month.

4. Tax not set aside - GST and PAYG sneak up like a “surprise bill” when really it was your money to hold.

Put simply: your books might say you’re profitable, but your bank account tells a different story.

A relatable situation

I worked with a plumber whose books showed a $50,000 profit for the quarter. Sounds great, right? Except here’s what was really happening:

• $30,000 was tied up in unpaid invoices.

• $10,000 had gone into upfront materials.

• $8,000 was sitting with the ATO because nothing had been set aside for GST.

• He was behind on supplier bills and had $2,000 left in the bank.

On paper, he was thriving. In reality, he was sweating every bill that came in.

How to fix it

The good news? This is solvable, but it takes systems, not guesswork.

1. Track debtor days

   - Don’t just send invoices, follow them up. The longer clients take to pay, the tighter your cash flow.

2. Separate your tax money weekly

   - Move GST and PAYG into a separate account every week. Out of sight, out of mind and no more BAS panic.

3. Know your margins

   - Stop guessing on quotes. Build in your true costs, including tax, super, and overheads, so profit is real.

4. Plan for debt repayments

   - Factor loan repayments into your cash flow forecast before you commit to new finance.

5. Forecast your cash flow

   - Look ahead, not just behind. A simple weekly forecast shows you whether you’ll have the money when you need it.

Ready to fix it for good?

Still struggling with profit on paper, but no money in the bank? Running a trade business doesn’t have to feel like you’re constantly behind.

The Small Business Foundations Course is designed to help tradies master the money side of business, without the confusion, late nights, or tax-time panic. Inside, you’ll learn step-by-step how to take control of cash flow, set up simple systems, and finally build a business that gives you freedom instead of stress.