Trades and construction businesses have one of the toughest cash cycles in New Zealand. Wages go out weekly. Materials are paid on the 20th of the month following. The client pays on a payment claim — if it’s approved, if it isn’t disputed, if the main contractor has been paid first. Then a slice is held back as retention.
It’s entirely possible to be busy, profitable and broke at the same time.
Where trades cash gets stuck
- Mobilisation — labour, hire gear and materials before the first claim is even submitted.
- Payment claims — under the Construction Contracts Act 2002, payers have set time frames to respond with a payment schedule, but the contract can set longer payment periods than you’d like.
- Retentions — held back until practical completion and the defects period. The Act requires retention money to be held on trust, but it’s still out of reach.
- Variations — extra work done now, argued over later.
- Supplier accounts — builders’ merchants and electrical wholesalers expect payment on their terms regardless of when your client pays.
What trades and construction businesses fund
| Need | Typical route |
|---|---|
| Wages and materials between progress claims | Line of credit or working capital loan |
| New ute, van or truck | Business vehicle funding |
| Digger, scaffold, compactor, trailer | Equipment funding |
| Taking on a bigger project | Property-secured loan up to $1m |
| Overdue GST or PAYE | IRD tax debt funding |
| Buying out a partner or another firm | Property-secured business loan |
Two ways Loanster can help
Property-secured. If you or a supporting party own NZ property — home, rental, commercial or a section — you can borrow $20,000 up to $1m as a first or second mortgage. No financials or tax returns for the initial assessment, which suits trades owners whose accounts run behind. Bad credit, defaults and arrears are considered case by case. Funding can happen within 24 hours of approval in some cases.
Unsecured. Businesses usually trading six months or more can borrow on turnover and bank statements, with decisions sometimes made the same day. Weaker credit is considered.
Before you take on the next big job
Big contracts are how trades businesses grow — and how many get into trouble. Run the numbers before you sign:
- Peak cash requirement — at the worst point, how much will you have paid out before you’re paid?
- Payment terms — how many days from claim to cash, realistically?
- Retention — how much is held back and for how long?
- Your buffer — what happens if a claim is disputed or paid a month late?
The cash-flow gap calculator gives a quick estimate using your outgoings and debtor days.
Getting paid faster on site
Funding covers the gap; shrinking it saves money. Practical steps:
- Invoice or claim the day a stage finishes, not at month-end.
- Take deposits on residential jobs for materials.
- Use clear, compliant payment claims — the Construction Contracts Act gives you real rights when claims are properly made.
- Chase early and consistently. Our guide to reducing debtor days has scripts and systems that work.
Example scenario
Example scenario — generic and illustrative. A Rolleston residential builder has four houses under way. Two clients’ progress payments are late because their bank drawdowns were delayed, retentions from last year’s jobs are still held, and merchant accounts are due on the 20th. The owner’s home has equity behind a bank mortgage. A property-secured working capital loan clears the merchant accounts and covers two fortnights of wages; it’s repaid as the delayed progress payments and retentions land. The builder then moves to weekly claims and deposits for materials on new contracts.
From Christchurch to Tauranga
Loanster works with trades businesses right across New Zealand — Christchurch rebuild veterans, Hamilton and Waikato housing crews, Tauranga and Bay of Plenty subdivision contractors, Wellington renovation specialists and Auckland commercial fit-out firms. The cash-flow problems are the same everywhere.
Start a 60-second enquiry — it doesn’t affect your credit score.