Quick answer
Why am I busy but always short of money?
Because profit and cash aren't the same. A job can make a profit on paper while materials, wages and tax leave the bank before the customer pays. Cash flow is about when money comes in and goes out.
The fix is a simple forecast: a list, week by week, of what's coming in and going out, so you see a gap coming while there's still time to act.
The jargon
The words you'll come across, in plain English.
- Cash flow: the timing of money coming into and going out of the business.
- Profit: what's left after costs. A business can be profitable and still run out of cash.
- Forecast: your best guess, written down, of money in and out over the coming weeks.
- Deposit: money paid up front, often to cover materials.
- Stage payment: part payment when a stage of a bigger job is done.
- Overdraft: borrowing from your bank by going below zero. It costs money.
- Payment plan: an agreement with HMRC to pay a tax bill in instalments.
A weekly forecast
How do I make a cash flow forecast?
Use dates, not hope. Many trades look 13 weeks (about 3 months) ahead, updated every week.
- Write what's in the bank now.
- Add the money you expect in each week, from invoices you've actually sent. Keep sales you're only hoping for separate.
- Add what goes out, on the dates it really leaves: materials, subcontractors, wages, what you take out, VAT, tax, rent, van, insurance, subscriptions and finance.
- Set a minimum balance you never go below.
- Mark the lowest point, and decide what to do before you get there.
- Every week, update it with the real bank balance.
It'll be wrong in places. The point is spotting a problem while there's still time to act. Plan for customers paying late, and add yearly bills before they arrive.
An example
What does a cash gap look like?
This is just an example, not financial advice. A £12,000 job might make a profit, but if £5,000 of materials goes out in August and the customer pays in October, you have to cover the gap. A deposit or stage payments can help, if your terms allow it.
Improve it
How can I improve my cash flow?
Act before the balance gets low:
- Invoice straight away at each agreed stage
- Check your payment terms, and your suppliers'
- Ask for a fair deposit where it makes sense
- Chase overdue invoices every time
- Put off purchases you don't need yet
- Keep tax and VAT money separate
- Talk to a qualified adviser early if it's getting tight
Warning signs
When should I get help with money?
Missing tax, supplier or wage dates, living on personal credit cards, using one deposit to cover old gaps, or not knowing which jobs make money: get professional help early.
Can't pay a tax bill? Contact HMRC straight away. You may be able to set up a payment plan to pay it in instalments, if HMRC agrees it's affordable.
Sources
Where this guide comes from.
Checked against these official pages on 27/10/2026. Next check due 27/01/2027. Rules and figures can change sooner, so check the official page again before making a tax, legal or money decision, and ask a qualified adviser about your own situation.
FAQs
Frequently asked questions.
How far ahead should I plan?
Many trades use 13 weeks, updated weekly, with a yearly view for tax, insurance and quiet seasons. Use whatever lets you see a gap coming.
Does a full diary mean good cash flow?
No. Timing, deposits, materials, margins and getting paid all matter.
Should I use an overdraft?
That's a borrowing decision. Compare the cost and terms, and get advice. Fix the cause first.
What if I can't pay a tax bill?
Contact HMRC straight away and ask about a payment plan. Never ignore it.
How should deposits go in the forecast?
On the date you expect them, alongside the materials, labour and tax they need to cover. A deposit isn't profit.
How does VAT fit in?
If you're registered, show when you collect VAT and when you pay it over. Don't count it as your money.
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