Cash Flow Guide for Construction Subcontractors in Australia

The construction cash flow problem

Construction subcontractors have one of the toughest cash flow cycles in Australian business. You buy materials upfront, pay your crew weekly, and wait 30-90 days for the builder to release your progress claim. If you're running multiple jobs, you can be $50K-$200K out of pocket before a single payment lands.

Add in the December-January shutdown (6-8 weeks of zero income but ongoing costs) and it's no surprise that construction businesses make up a huge portion of insolvencies in Australia.

The typical cash flow timeline

1. Week 1: Purchase materials, hire equipment - $15K-$50K out of pocket
2. Weeks 2-4: Pay workers weekly while completing the work - $5K-$20K/week
3. Week 4-6: Submit progress claim to builder
4. Week 6-12: Wait for builder to approve and pay the claim
5. Week 12+: Finally receive payment - but you've been funding the job for 3 months

How a business overdraft solves this

A business overdraft gives you a revolving pool of cash to draw from during the gap. Buy materials, pay wages, keep the job moving - then repay the overdraft when the progress claim lands. The facility resets and you're ready for the next job.

We recently funded a $60K overdraft for a construction business and a $55K facility for an electrical contractor - both within 24 hours.

How much do construction subbies typically need?

December-January shutdown survival

If your business shuts down for 6-8 weeks over Christmas, you need 2 months of operating costs available. Wages may stop, but insurance, lease payments, equipment finance, and personal expenses don't. An overdraft set up before November means you're covered without scrambling.

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