Calculators

Cash gap calculator

How long are you the bank? See how much of your money is sitting with customers, and what you'd free up by invoicing sooner.

What you invoice in a normal month.

Materials, subbies and hire you've paid for before the customer pays you.

From getting the invoice. The Australian small business average is about 23 days.

Waiting on customers $29,589 At any one time
Your own money in it $11,836 Already spent on the jobs

It takes 30 days from finishing a job to getting paid. At any time, about $29,600 is sitting with your customers, including $11,800 you've already spent.

Finish to paid
30 days
Each day sooner frees
$986
Share of a month's turnover tied up
99%

Invoice the day you finish and you free up about $6,900, for good.

That's cash released once, not extra profit each year. It's money that stops sitting with your customers and starts sitting in your account.

How we work it out
Turnover a day
Turnover a month × 12 ÷ 365
Waiting on customers
Turnover a day × (days to invoice + days to pay)
Your own money in it
Waiting on customers × the share you've paid out
Freed by invoicing on the day
Turnover a day × days to invoice

The clock starts when the job is finished, so the real gap is usually longer. Materials are often bought before or during the job. Trade accounts with 30-day terms can cover some of what you've paid out.

Where the 23 days comes from

Xero Small Business Insights tracks how long Australian small businesses wait to be paid after sending an invoice. In the June quarter of 2026 it was 22.9 days, and invoices were paid an average of 6 days late. That figure covers all small businesses, not just trades, so use your own number if you know it.

Source: Xero Small Business Insights, Australia.

Example: $40,000 a month

A tradie turns over $40,000 a month, which is about $1,315 for every day of the year. Around 40% of each job goes on materials and subbies before the customer pays. Invoices go out 5 days after a job is finished, and customers take 14 days to pay.

That's 19 days from finishing a job to getting paid. At any one time, about $25,000 is sitting with customers, including about $10,000 the tradie has already spent.

Sending each invoice the day the job is finished frees up about $6,600. That's cash released once, not extra profit each year, but it stays in the bank instead of with customers.

Questions tradies ask

What is a cash gap?

It's the time between paying for a job and getting paid for it. Materials, subbies and wages go out first, and the customer's money comes in later. While you wait, you're effectively lending your customers the money to get the job done.

Can a profitable business run out of cash?

Yes. A job is profitable when you invoice it, but the cash only arrives when the customer pays. If supplier bills, wages and BAS fall due before customers pay, a business with plenty of work can still run short. Construction has more companies go insolvent than any other industry in Australia, with 3,472 construction companies entering external administration or having a controller appointed in 2025-26.

How long do Australian small businesses wait to be paid?

About three weeks. Xero's data on Australian small businesses shows they waited an average of 22.9 days to be paid after sending an invoice in the June quarter of 2026, and invoices were paid an average of 6 days late. That covers all small businesses, not just trades, so use your own number in the calculator if you know it.

What payment terms should a tradie use?

Short and in writing. Payment on completion or within 7 days is common for trade work and small jobs, while bigger commercial customers often pay on 30 days or longer. Put your terms on the quote and the invoice, and show a due date rather than just "14 days". If you never set terms, payment is generally due within a "reasonable time", which is vague and easy to argue about.

Can I ask for a deposit?

For many jobs, yes, and a deposit means the customer covers some of your materials instead of you. Residential building work has state rules, though. In NSW, residential building work over $5,000 needs a written contract, and the deposit can't be more than 10% of the contract price. Other states set their own limits, so check with your state's building or fair trading regulator before setting a deposit.

How do I shorten my cash gap?

Start with the parts you control:

  • Send the invoice the day you finish the job.
  • Take a deposit or progress payments on bigger jobs, within your state's rules.
  • Set short payment terms and show a due date on every invoice.
  • Make it easy to pay, with a payment link or card option on the invoice.
  • Send a reminder before the due date and follow up as soon as an invoice is overdue.
  • Use your supplier trade account terms, so materials are paid for after the customer pays you.

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