How Australian Cabinet Makers Can Protect Cash Flow When Builders Pay Late
A full order book can still create a cash crisis. How to set deposits and progress claims around your real costs, stop funding unapproved work, and see what each builder owes you before a late payment becomes a problem.
The short answer
Cabinet makers rarely run short of cash because they lack work. They run short because they fund the job before the customer funds them. Set deposits and progress claims around when your costs are spent, not around habit. Do not order materials or release production until the contract is signed and the deposit is in the bank. Never manufacture a variation without written approval. Track what each builder owes you including completed and committed work that has not been invoiced, and review that exposure every week.
A joinery business can have a full order book, a busy factory and a healthy margin on every quote, and still struggle to make payroll. Revenue and cash are not the same thing. A job that is profitable on paper can still leave the business out of pocket for months.
The reason is timing. Cabinet makers buy board and hardware, pay wages every week, and cover transport and installation before the builder or client pays for any of it. When a payment arrives late, the gap is funded from the business's own account, its overdraft, or its suppliers' patience.
The work is still there. The ABS reports that the value of non-residential building approved rose 14.4% in July 2026, and dwelling approvals, while down 3.6% on June, were 9.0% higher than a year earlier. Demand is not the problem. For businesses supplying builders and developers, the problem is how much of that work they are financing for someone else.
So the question for this article is a simple one: how much of your current work-in-progress are you paying for yourself? And what can you change in the job workflow, before the work reaches the workshop, to bring that number down?
Why cabinet businesses are exposed to late payment
Most trades sell labour and get paid for it at the end of the week or the end of the job. A cabinet maker sells a manufactured product, and manufacturing has to be paid for in advance. Before the first carcass is cut, the business has usually spent money on:
- Materials ordered before production. Board, edging, hardware, handles, benchtops and bought-in doors, often on supplier terms that fall due whether or not the builder has paid.
- Labour paid weekly. Drafting, CNC programming, machining, assembly and finishing wages go out every pay run.
- Cabinets completed before site delivery. Finished joinery sitting in the factory because the site is not ready is cash on a pallet.
- Installation costs before final payment. Transport, installers, return visits and defect callbacks all happen before the last claim is paid.
- Variations completed on trust. Extra panels, a changed layout or a second install visit, done because someone asked on site.
The risk is sharper in commercial joinery and builder-led work. The cabinet maker is usually a subcontractor near the end of the payment chain. The builder sets the contract, the claim dates and the payment terms. Programmes slip because of other trades, which pushes delivery and the claims attached to it. And a single builder account can represent a large share of the order book.
It is also a weak point for the industry as a whole. ASIC's insolvency data shows construction was the most common industry for companies entering external administration between 1 July 2025 and 31 May 2026, accounting for 24.4% of appointments. When a builder fails, the subcontractors who were owed money, or who had already manufactured unpaid work, are the ones left carrying it.
The danger does not start when a customer formally becomes insolvent. Cash flow deteriorates much earlier: when payments drift outside terms, when a project pauses between stages, when cabinets are finished but cannot be delivered, when a claim is disputed because the paperwork is thin, and when retention and defects periods hold back the final amount.
Set payment terms around your cost exposure
Payment terms are usually set by habit (“30 days from invoice”) or by the builder's standard subcontract. A better starting point is to ask when your costs are actually spent, and set payment points that keep your cash roughly in step with them.
Deposits and upfront payments
The deposit should cover the costs you commit on acceptance: the materials and hardware you order straight away, bought-in components with long lead times, and the drawing time you spend before anything is machined. If the deposit does not cover those, you are lending the customer money from the day they sign.
For domestic work contracted directly with a homeowner, check your state's home building rules before setting a deposit. Under NSW home building law the maximum deposit is 10%. In Victoria, a domestic building contract can take a deposit of 10% if the contract price is under $20,000 and 5% if it is $20,000 or more. In Queensland the QBCC sets 10% for level 1 contracts and 5% for level 2 contracts over $20,000, with an exception allowing up to 20% where substantial customised or prefabricated work done off-site makes up more than half the contract value, which is worth checking for joinery-heavy jobs. Where a deposit is capped, the answer is an earlier progress payment, not a larger deposit.
Progress claims by manufacturing stage
Once the deposit is spent, the next cash should arrive at the point where your costs step up again. For most joinery work that is when the materials are ordered and when the workshop finishes the job, not when the installer packs up. A milestone structure might look like this:
- Deposit on acceptance of the quote and contract
- Claim on shop drawing approval or material procurement
- Claim at factory completion, ready for delivery
- Final claim on delivery or installation
Two jobs rarely need the same schedule. A supply-only job has no installation stage, so the final claim belongs at delivery. A supply-and-install job carries the extra cost and delay of site work, so it needs a claim before installers are sent. Long-lead materials, such as imported hardware or special-order veneers, justify a payment at the point of order rather than at delivery.
Why “payment on completion” is too late
Take a $60,000 joinery job (excluding GST) with $43,000 of costs: $1,500 of drawings and admin, $22,000 of materials and hardware, $13,000 of workshop labour, $1,000 of delivery and $5,500 of installation. On paper it earns $17,000. The table shows how much of your own money is in the job at each stage under two payment structures, assuming every claim is paid on time.
| Stage | Costs spent so far | Paid on completion: your cash in the job | Milestones (10% / 25% / 35% / 30%): your cash in the job |
|---|---|---|---|
| Accepted, drawings prepared | $1,500 | $1,500 | Nil. $6,000 deposit received |
| Drawings approved, materials ordered | $23,500 | $23,500 | $2,500. $21,000 received |
| Factory complete | $36,500 | $36,500 | Nil. $42,000 received |
| Delivered and installed | $43,000 | $43,000 until the builder pays | $1,000 until the final $18,000 arrives |
Under “payment on completion”, the business finances the entire job, then waits for the builder's payment cycle on top. Under the milestone structure, the most it ever has in the job is $2,500. Same job, same margin, completely different risk.
Now suppose the builder sits on the factory-completion claim and you deliver and install anyway. You have received $21,000 against $43,000 of costs, so $22,000 of your money is in someone else's project. That is the gap this article is about.
A note on contracts: the right structure depends on the contract you sign and the laws that apply to it. Builder subcontracts often fix claim dates and payment terms, domestic work has its own deposit and progress payment rules, and security of payment laws differ between states. Treat the milestones above as a way to think about exposure, and get advice on your own terms.
Do not start unfunded work
In a busy workshop, “the quote was accepted” quietly turns into “the job is on”. They are not the same thing. A job moves through five separate states before anyone should be cutting board for it:
- Quote accepted. The customer has said yes to a price.
- Contract signed. The scope, terms, claim dates and responsibilities are agreed in writing.
- Deposit received. The money is in the bank, not promised.
- Materials ordered. You have now committed cash to a supplier.
- Production released. Labour starts being spent.
The expensive mistakes happen when steps 4 and 5 run ahead of steps 2 and 3: board ordered on the strength of a phone call, or a job slotted into the CNC schedule because there was a gap, before the contract or deposit has arrived.
The production-release checkpoint: no material commitment and no manufacturing start until the agreed commercial conditions are satisfied. Contract signed, deposit received, scope and drawings approved, claim schedule agreed. If any one is missing, the job waits.
Most workshops already check whether a job is technically ready: drawings complete, measurements confirmed, materials selected. Far fewer check whether it is commercially ready. The fix is to make both visible in the same place, so the person releasing work to the floor can see that the deposit has not landed before they order the board. It is the same thinking that lets you connect accepted quotes to purchasing and production without re-keying the job at every step.
Variations are a cash-flow issue, not only a margin issue
Unpriced variations are usually discussed as lost margin. They are also the least collectable money on the job. A variation manufactured without written approval has no agreed price, no agreed scope and no agreed claim date. When the builder disputes it, you are arguing about work that is already installed.
Variations arrive in several forms:
- Verbal changes from the site supervisor or client
- Client-requested extras added after the drawings were approved
- Design revisions from the architect or designer
- Site conditions that differ from the drawings, such as out-of-square walls or moved services
- Extra delivery or installation visits because the site was not ready
- Rework caused by damage or errors from other trades
The rule: do not manufacture the variation simply because someone mentioned it on a phone call. Record it, price it, confirm any effect on the programme, and get written approval before materials are ordered or the workshop starts.
A usable variation record has four parts:
- Updated scope. What is changing, with a revised drawing or marked-up photo where it helps.
- Updated price. The cost of the change, including any extra visits, not a number to be sorted out later.
- Responsibility for the delay. If the change or the site condition pushes the programme, say so and say who caused it.
- Written approval. A signed variation, an approval email, or a sign-off in your job system. A text message is better than nothing, but it should be saved to the job, not left on a phone.
The margin side of this story is covered in protect your margin when the market tightens. The cash-flow side is simpler: an approved variation can be claimed at the next milestone. An unapproved one usually cannot be claimed at all until the dispute is settled.
Monitor customer exposure before it becomes a problem
Most businesses look at their debtors list. A debtors list only shows what has been invoiced. It does not show the finished cabinets in the factory, the board ordered last week or the variation installed on Friday. To see what a customer actually owes you in cash terms, track these for each builder or developer:
- Outstanding invoices, and how far outside terms they are
- Unbilled completed work, including finished cabinets not yet delivered
- Deposits received and not yet applied
- Materials purchased for the customer but not yet invoiced
- Open variations, approved or not
- Jobs on hold, and what has already been spent on them
- Customer concentration: the share of your work-in-progress tied to that one account
Put together, that gives a single exposure figure per customer:
Customer exposure = outstanding invoices + work completed but not invoiced + materials committed but not invoiced − deposits held and not yet applied
Business.gov.au recommends running credit checks on customers before offering credit and setting limits on how much credit you offer. For a joinery business the useful version of that is an exposure limit per builder: a figure you agree internally, above which new work for that customer does not start until payments catch up.
Early warning signals from a builder or developer
- Repeated requests to delay payment, or to pay “next run”
- Sudden scope changes or pressure to deliver early without a claim
- New projects starting while older invoices remain unpaid
- Refusal to confirm a payment schedule in writing
- Disputes that appear only after delivery, never before
- Changes to the contracting entity between projects
None of these proves a customer is in trouble, and this is not a substitute for professional credit advice. It is a practical internal warning system: when two or three signals appear on the same account, slow the release of new work and bring the exposure down before adding to it.
It also starts before the first job. Confirm exactly who the contracting party is, not just the trading name on the site sign. Check the ABN and company details on the government registers, and make sure the entity on the contract is the one you invoice and the one that pays.
Build an evidence trail that helps you get paid
A sent invoice is a request. What gets it paid, especially when a builder disputes it, is proof that the work invoiced was agreed, approved and completed. Useful records include:
| Record | What it proves |
|---|---|
| Accepted quote and signed scope | What was agreed, at what price, with which exclusions |
| Approved drawings | What the customer signed off before manufacture |
| Variation approvals | That extra work was requested and priced before it was done |
| Purchase orders | That materials were committed for this job, and when |
| Delivery confirmations | That the goods arrived, and on what date |
| Installation sign-off and photos | That the work was completed and in what condition |
| Defect and completion notes | What was outstanding, and when it was closed out |
| Invoice dates and payment terms | When the money fell due |
This matters beyond a polite dispute. Under the NSW security of payment laws, for example, a payment claim must state the amount claimed and describe the construction work or related goods and services it covers, and the NSW Government notes that supporting documents such as statements, certificates, delivery dockets and photographs can be included. A business that can produce those in five minutes is in a very different position from one searching three inboxes and an installer's camera roll.
The problem is rarely that the records do not exist. It is that they are scattered: the approval in an email, the variation in a text, the delivery docket in the ute and the photos on a phone. Keeping them attached to the job, as they happen, is what turns them into evidence.
When a builder is already paying late
Business.gov.au sets out a sensible escalation path for unpaid invoices: review the contract, send a reminder, send a letter of demand, use a dispute resolution service, and then consider a debt collector or legal action. The Australian Small Business and Family Enterprise Ombudsman offers an online tool to find low-cost dispute resolution services.
Construction work has an extra route. Every state and territory has security of payment legislation that gives people who carry out construction work, or supply related goods and services, a statutory right to progress payments and access to fast adjudication. The detail differs by state, so the NSW rules are an example rather than a national standard:
- A respondent who does not intend to pay the full claim must provide a payment schedule within 10 business days of the claim, or they become liable for the whole claimed amount.
- For non-residential work, a head contractor must pay a subcontractor's progress payment no later than 20 business days after the claim is made.
- If no date is set in the contract, a claim can be made on the last day of each month.
- “Pay when paid” clauses, which make your payment depend on the builder being paid first, have no effect.
- On projects worth $20 million or more, head contractors must hold subcontractors' retention money in a trust account.
Queensland also uses project trust accounts and retention trust accounts on certain contracts, designed to secure money paid down the contractual chain for the subcontractors at the end of it. Other states have their own requirements.
Practical point: statutory rights only help if you use them within their time limits and with the right paperwork. Know which security of payment law applies to each contract before the job starts, and whether a claim needs to state that it is made under that Act. Confirm the details with your state regulator or a construction lawyer before relying on them.
Whatever route you take, stop starting new work for a customer whose account is outside terms. Every week you keep manufacturing adds to the amount you are trying to recover.
A weekly cash-flow review for a cabinet workshop
None of this needs a finance team. It needs 20 minutes every Monday morning with the owner, whoever runs production and whoever sends the invoices, working through seven questions:
| Question | What to do with the answer |
|---|---|
| What is due to us this week? | Confirm each payment with the customer before the due date, not after it. |
| What has been completed but not invoiced? | Raise the claim today. Unbilled work is an interest-free loan. |
| Which jobs have materials committed? | Check each one has a deposit or claim covering that spend. |
| Which jobs are waiting on customer approval? | Chase the approval, and keep those jobs out of production until it arrives. |
| Which customers are outside terms? | Follow up, and hold new releases for that account until it is back within terms. |
| Which variations are still undocumented? | Write them up, price them and send them for approval this week. |
| What is the maximum cash exposed to each customer? | Compare it with the limit you set. Anything above the limit gets a decision, not a shrug. |
The first few reviews are slow because the answers live in different places. That is useful information in itself. If it takes an hour to work out what one builder owes you, the business is making production and purchasing decisions without knowing its own exposure.
Protect cash before the job reaches the workshop
Cash-flow trouble in a cabinet business rarely starts with a dramatic collapse. It starts with a job released before the deposit arrived, a variation built on a nod, a claim raised a fortnight late, and a builder account nobody totalled. The controls are straightforward:
- Set payment terms around when your costs are actually spent
- Release production only when the commercial conditions are met
- Get variation approval in writing before manufacturing
- Track completed and committed work that has not been invoiced
- Keep evidence for every milestone attached to the job
- Review exposure by customer every week
A profitable job that pays late can still damage a small cabinet business. Cash-flow discipline needs to be built into the job workflow, not left to the end of the month.
CabiPro helps cabinet and joinery businesses keep the accepted scope, purchase commitments, job stages, variations, delivery status and invoicing connected in one record, so owners can see not just what is being produced, but what cash is tied up in each job.
Frequently asked questions
How much deposit should a cabinet maker ask for?
Enough to cover the costs you will commit before the next payment arrives. For most jobs that means the materials, hardware and any bought-in components you order on acceptance, plus the design and drawing time spent before production. There is no single right percentage. Work out your committed cost per job, then set the deposit so you are not funding those purchases yourself. For domestic building work, check your state's home building rules, because some states cap the deposit a contractor can take.
When should a cabinet maker invoice a builder?
At the milestones written into the contract, and as soon as each one is reached. A common structure is a deposit on acceptance, a claim after shop drawing approval or material procurement, a claim at factory completion, and a final claim on delivery or installation. Invoicing everything on completion leaves the business funding the whole job until the builder pays.
Do security of payment laws apply to cabinet makers and joiners?
Often, yes. Every state and territory has security of payment legislation covering contracts for construction work and for the supply of related goods and services, which can include joinery manufactured off-site for a building project. The rules, timeframes and exclusions differ between jurisdictions, including for residential work, so confirm how they apply to your contracts with your state or territory regulator.
What should I do when a builder pays late?
Check the contract terms first, then follow up promptly with a reminder that quotes the invoice, the milestone it relates to and the due date. If that fails, a letter of demand, a low-cost dispute resolution service, or a payment claim and adjudication under your state's security of payment laws may be options. Stop starting new work for that customer until the account is back within terms.
Should I manufacture a variation before it is approved?
No. A verbal request on the phone or on site is not an approved variation. Record the change, price it, confirm any effect on the programme, and get written approval before materials are ordered or the workshop starts. A variation made without approval is the hardest amount on the job to get paid.
Sources and further reading
- Australian Bureau of Statistics, Building Approvals, Australia, July 2026: abs.gov.au
- Australian Securities and Investments Commission, ASIC Corporate Insolvency Update, Issue 40, June 2026: asic.gov.au
- business.gov.au, Payment terms: business.gov.au
- business.gov.au, What to do when you haven't been paid: business.gov.au
- NSW Government, About Security of Payment for construction contractors: nsw.gov.au
- NSW Government, Making a payment claim under Security of Payment laws: nsw.gov.au
- NSW Government, Retention money held by head contractors: nsw.gov.au
- NSW Legislation, Building and Construction Industry Security of Payment Act 1999: legislation.nsw.gov.au
- NSW Government, Contracts for residential building work: nsw.gov.au
- Consumer Affairs Victoria, Deposits and payments for domestic building: consumer.vic.gov.au
- Queensland Building and Construction Commission, Deposits and progress payments: qbcc.qld.gov.au
- Queensland Building and Construction Commission, Trust accounts: qbcc.qld.gov.au
Sources checked on 28 September 2026. Security of payment, home building and trust account rules differ between states and territories and can change; confirm current requirements with your state or territory regulator.
Disclaimer: This article provides general information only and does not constitute legal, financial, credit or contractual advice. The worked example and milestone percentages are illustrative. Review payment terms and contracts against your own business and legal requirements.
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