Trades and constructionQuillbrook Electrical
The business
An electrical contractor turning over $740,000, with the owner and five staff.
The problem
Every quarter, the BAS arrived as a shock. The business owed $38,000 to the ATO on a payment plan for overdue GST and PAYG withholding. The owner took drawings whenever there was money in the account and only found out his profit when the tax return was done, five months after year end. Customers took an average of 47 days to pay.
What changed
The owner started reviewing a monthly report showing profit, cash, and how much of the bank balance was owed to the ATO for GST, PAYG withholding and super. He opened a separate tax account and moved that amount across every week. He replaced ad hoc drawings with a fixed weekly amount based on actual profit. A quarterly review of the debtor list showed three builders paying in more than 60 days. He started asking for deposits on jobs over $10,000 and moved larger jobs to fortnightly progress claims.
The results after 12 months
- ATO payment plan of $38,000 cleared in 11 months. The weekly transfers covered each new BAS as it built up, so spare cash each month went to the old debt instead of the next quarter's bill.
- Every BAS paid on its due date. The money was already sitting in the tax account when each one fell due.
- Debtor days down from 47 to 33, freeing up about $28,000. On $740,000 of sales, each day customers take to pay ties up about $2,000. Deposits and fortnightly claims took 14 days off.
- The owner now sees his profit every month, so his drawings match what the business earns.
Hospitality and foodFennick & Rye Kitchen
The business
A café and catering business turning over $610,000, run by a husband and wife with nine casual and part-time staff.
The problem
The café was busy six days a week, yet the bank balance never grew. The owners worked 60-hour weeks and paid themselves less than their senior staff. Wages ran at 41% of sales. Nobody knew the food cost percentage, and catering prices hadn't changed in two years.
What changed
The owners began tracking two numbers every month: wages and food cost, each as a percentage of sales. Comparing rosters with sales by hour showed two afternoon shifts that cost more in wages than they brought in. They cut those shifts. They also repriced the menu and catering packages to match current supplier costs.
The results after 12 months
- Wages down from 41% to 36% of sales, worth $30,500 a year. On $610,000 of sales, each percentage point equals $6,100. Cutting the two loss-making shifts and rostering to peak trade took five points off.
- Food cost down from 35% to 32%, worth $18,300 a year. New menu and catering prices restored the margin that supplier increases had eaten over two years.
- Together, $48,800 a year more profit.
- The owners now pay themselves a regular weekly wage, funded from that extra profit.
AutomotiveCorvalla Smash Repairs
The business
A smash repair business turning over $2.1 million, with 14 staff. Insurers fund about 80% of its work.
The problem
Insurers took an average of 61 days to pay. Parts suppliers wanted payment in 30. The overdraft sat at $142,000 against a $150,000 limit, and the owner had come close to missing payroll twice in six months.
What changed
The owner started using a 3-month cash flow forecast, updated monthly, to see tight months before they arrived. A review of the debtor ledger found that one in five insurer invoices was rejected the first time, usually missing photos or a mismatch with the approved quote. The team now completes a checklist before each invoice goes out. Every invoice over 30 days old is followed up weekly, and customer excesses are collected before vehicles are released. When the forecast showed a January shortfall six weeks ahead, the owner agreed extended terms with the main parts supplier.
The results after 9 months
- Insurer rejections down from 20% of invoices to 4%. The pre-invoice checklist caught missing photos and quote mismatches before submission.
- Debtor days down from 61 to 39. Invoices accepted the first time started the insurers' payment clock weeks earlier, and weekly follow-up stopped old invoices sitting unnoticed.
- About $126,000 of cash back in the bank. On $2.1 million of sales, each debtor day is worth about $5,750. Cutting 22 days released about $126,000.
- Overdraft reduced from $142,000 to nil. The released cash went straight to the overdraft, and the forecast kept it there through January.
Transport and logisticsBrandervale Freight
The business
A freight and haulage company turning over $3.4 million, with 11 trucks and 14 drivers.
The problem
Net profit had fallen from $290,000 to $85,000 in two years. Fuel and repairs had risen, but customer rates were set three years earlier. Asset finance repayments ran at $38,000 a month, and the owner couldn't predict his month-end bank balance.
What changed
Monthly budget vs actual reports showed which costs had moved since rates were last set. A 3-month cash forecast made month-end cash predictable. The owner then reviewed cost per kilometre for each truck and each customer contract. That review found two contracts priced below cost and two trucks working less than 40% of available days. He renegotiated rates with a fuel levy linked to the diesel price, exited one loss-making contract and sold the two under-used trucks.
The results after 12 months
- The fuel levy recovers about $96,000 a year. Rates now rise when diesel does, instead of the business absorbing each increase.
- Net profit up from $85,000 to $262,000. The $177,000 improvement came from the fuel levy, exiting the contract that cost more to run than it earned, and lower registration, insurance, maintenance and interest on the two trucks sold.
- $110,000 of asset finance repaid from the sale of the two trucks.
- Finance repayments down by $6,200 a month, which made month-end cash easier to plan.
Manufacturing and wholesaleOstrand Steel Fabrication
The business
A steel fabricator with 22 staff, growing from $4.2 million to $5.1 million in turnover.
The problem
Sales were rising, yet cash was getting tighter. Quotes relied on the owner's experience rather than actual job costs. The owner wanted to buy a $650,000 laser cutter and add a second shift, but didn't know whether the business could carry it.
What changed
The owner began reviewing gross margin by job type and customer every quarter. Repeat contract work earned a 32% gross margin. Small one-off jobs earned 11%. He introduced a minimum order charge and new rates for small jobs. Before buying the laser cutter, he tested the purchase in a scenario model. It paid for itself in 3.4 years with a second shift, and in more than 6 years without one. He waited until the order book could support a second shift, then applied for finance with a rolling 12-month forecast.
The results after 12 months
- Gross margin up from 24% to 29%, adding about $255,000 of gross profit. On $5.1 million of turnover, each percentage point is worth $51,000. Small jobs either moved to profitable prices or went elsewhere, which freed workshop time for contract work at 32%.
- The laser cutter was bought only once the second shift was viable, avoiding a payback period of more than 6 years.
- Bank finance was approved on the first application, because the forecast showed the repayments were covered month by month.
- Quotes are now based on actual job costs.
Professional servicesMerrivane Consulting Engineers
The business
An engineering consultancy with 12 staff and annual fees of $2.3 million.
The problem
The directors wanted to hire three engineers but had no spare cash. Lock-up (unbilled work plus debtors) stood at 118 days. Staff utilisation was 58%. For two years, the directors had drawn more than the firm earned and covered the gap with the overdraft.
What changed
The directors started tracking utilisation by person and lock-up every month. They moved to billing at project milestones and introduced fixed-fee scoping for smaller jobs. Each quarter they set 90-day targets for each director. A rolling 12-month forecast showed when each new hire could be afforded, and the directors set their drawings below forecast profit.
The results after 12 months
- Lock-up down from 118 to 76 days, releasing about $264,000 of cash. On $2.3 million of fees, each day of lock-up holds about $6,300. Milestone billing turned work into invoices weeks earlier.
- Utilisation up from 58% to 67%. With utilisation visible by person, the directors moved work to engineers with spare capacity before hiring.
- Two engineers hired, with no use of the overdraft. The forecast timed each hire to the months when released cash covered the extra wages.
- Directors' drawings now come from profit, not the overdraft.
RetailPellbrook Fresh Supermarkets
The business
A family-owned group of two independent supermarkets with combined turnover of $17 million and 85 staff.
The problem
The owners did their own reporting at night in spreadsheets. They had no results by store or by department. The bank's covenant ratios were close to a breach. Meanwhile, the owners had the chance to buy a third store, with an asking price of $3.2 million.
What changed
The owners replaced their spreadsheets with a monthly board-style report showing results by store and by department, with a check of the bank's covenant ratios each month. The report showed shrinkage in fresh produce and deli of 6.8% of sales, against a target of 4%. They changed ordering and markdown processes, and matched rosters at each store to trading hours. Before making an offer on the third store, they tested the vendor's figures against the store's trading history. The vendor's price assumed sales the store hadn't reached in three years.
The results after 12 months
- Fresh produce and deli shrinkage down from 6.8% to 4.5%. Smaller, more frequent orders and earlier markdowns meant less stock was thrown out.
- Profit up by $214,000. The lower shrinkage and fewer wage hours in quiet trading periods both flowed straight to profit.
- Covenant ratios back within limits, with room to spare, because the extra profit lifted the group's interest cover.
- Third store bought for $2.65 million, $550,000 below the asking price. The owners based their offer on the store's actual sales, and the vendor accepted it.
AgricultureKellandry family farming group
The business
A three-generation mixed farming business running merino sheep, cattle and winter crops, with turnover of $5.8 million. The parents are in their sixties. Their son works on the farm, and their daughter has a career elsewhere.
The problem
The overdraft peaked at $1.1 million before harvest each year, and the bank wanted forecasts the family couldn't produce. Nobody knew which enterprise made the most money. There was no succession plan. Assets sat across the parents' names, a family trust and a company, and the question of fairness between the two children caused tension.
What changed
The family started budgeting and forecasting by enterprise, measuring gross margin per hectare and per dry sheep equivalent. Both generations met every quarter to review the numbers and agree on decisions. They reviewed the group's structure and worked through a succession plan in facilitated family meetings. The family's solicitor updated the wills and trust deed to match the plan.
The results after 18 months
- The cattle enterprise earned about half the gross margin per hectare of the sheep. Once the family saw that, they moved country into sheep and cropping.
- Seasonal overdraft peak down from $1.1 million to $640,000. The cash forecast showed the peak months in advance, so livestock sales, grain sales and machinery purchases were timed to bring cash in before it hit.
- A written succession plan, signed by every family member, with the son taking over management in year three. Raising the fairness question openly in the family meetings allowed the plan to set out how the daughter is treated, which ended the tension.
- Wills and trust deed now match the succession plan.
Illustrative examples. The businesses, people and figures are fictional.
