Maximising Cash Flow: Tips for Plumbers

Managing cash flow in a plumbing business is absolutely essential. It fuels both day-to-day operations and long-term growth.

Luckily, there’s no shortage of tools and tactics you can use to build and maintain cash flow. Here are six to get you started.

1. Invoice quickly and encourage fast payment

Getting paid on time will help you maintain healthy cash flow. Get into the habit of invoicing customers as soon as a job is done. Better yet, use software to automate billing to save time and reduce mistakes.

You could even offer to take card payment from customers on the spot.

Consider giving a discount to customers who pay on time or offer flexible repayment plans if that keeps the money flowing.

2. Make sure you can easily access credit

Being able to access credit whenever you need it will help you plug any cash flow gaps. It’ll also means you can make the most of unexpected growth opportunities that come up.

For example, if you win new business, but don’t have the cash on hand to buy materials or take on subbies, a pre-approved finance, like Laddr's Line of Credit could make all the difference.

3. Stay on top of costs

The money going out of your business is just as important as what’s coming in. Keep a close eye on your expenses. Regularly review supplier contracts, work with your suppliers to make sure your pricing is up to date and cut unnecessary costs where possible.

Like a dripping tap, even small amounts of wasted expense will hurt your cash flow over time.

4. Build repeat business

Repeat business is a goldmine for cash flow. Offer maintenance plans and contracts for larger customers, with cheaper rates for regular work. This will bring in steady revenue and help you build customer relationships while you’re at it.

As an extra bonus, this kind of work can be a great way to train junior plumbers and apprentices.

5. Spread out large costs

For big, one-off expenses (like buying a new ute or jetter) consider using finance, like a Vehicle and Equipment Loan from Laddr, to spread out the cost. This will smooth your cash flow and allow you to make essential purchases sooner.

6. Review your pricing

Regularly check that your rates are still giving you a healthy profit margin, while remaining competitive. Particularly if your costs have increased, consider reflecting this in your prices.

You should also review your rates if you have invested in equipment and personnel that deliver a quicker and better result for customers.

Better cash flow will mean you can continue to reinvest in your business and improve services. Doing that should mean yet more cash flow. Then rinse and repeat.

These tips were compiled by the finance experts at Money.com.au