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Our stories dive deeper into construction trends, expert insights, and real-world project experience.
Nov 12, 2025
Running a contracting business is more than delivering great work on site. You can be the best carpenter, roofer, plasterer, or plumber in the county but if your financial systems are a mess, the business will eventually feel it.
That’s why I recently sat down with Raj from Five Rivers Accountancy to talk through the practical, real-world habits that separate financially healthy construction companies from struggling ones.
Raj has worked with blue-chip giants like PWC, Heathrow, and Dulux before moving into the SME world, where he specialises in helping trades and contractors get control of their cashflow, tax planning, and project performance. The insights he shared are extremely valuable no matter where you’re based—UK, Ireland, US, or Australia.
1. A Healthy Contracting Business Knows Its Numbers. Project by Project
One of the biggest red flags Raj sees? Contractors who don’t know the profitability of their projects until months later usually when the accountant breaks the bad news.
Most contractors simply check the bank balance and assume they’re fine. But that ignores:
incoming bills that aren’t paid yet
CIS payments
VAT liabilities
cost overruns
under-billing vs actual work completed
“You need to know where you are during the year,” Raj says, “not nine months later.”
He recommends tracking each job individually, costs, materials, labour, variations, and margins. This is exactly where a tool like Assemble Pro removes blind spots. When you can see, in real time, that your excavation costs are blowing out or that you’ve hit unexpected groundwork, you can course-correct early instead of discovering it after year-end.
A transparent “paper trail” also protects you when discussing changes with clients.
2. Don’t Bid Just to Win - Bid for Profit
Contractors often price jobs low just to secure the work. But razor-thin margins mean a rainy week, a delayed payment, or a small mistake can wipe out the entire profit.
Raj stresses bidding with healthy margin assumptions, not “bare minimum levels” just to get a job over the line. Then, after each project, review:
Did your margins hold?
What overruns happened and why?
What assumptions should change in future quotes?
This constant loop of learning builds a stronger, more predictable business.
3. Cashflow, Billing & Stage Payments Need Tight Oversight
A common issue Raj sees is contractors doing all the work but not billing in line with what was agreed or chasing payments too late.
It’s also normal for contractors to have paid out all costs before receiving the matching income, which can create false optimism in the bank account.
A system that links estimating, quoting, takeoffs, and invoicing (again where Assemble Pro shines) makes sure:
your billing matches the work completed
variations and caveats are documented
stage payments happen on time
you don’t fall behind on cashflow unexpectedly
4. UK Contractors: Big Regulatory Changes Are Coming
Raj highlighted two major shifts in the UK that contractors need to prepare for:
a) E-Invoicing (from ~2029/2030)
Invoices over £10,000 will need to be digitally transmitted and traceable a blockchain-style system allowing HMRC to track invoice flows. This will tighten record-keeping and reduce the “Tesco bag of receipts” approach.
b) Making Tax Digital (MTD)
From next year, self-employed contractors must submit quarterly projections effectively forcing more disciplined bookkeeping. Xero, QuickBooks, and FreeAgent are the main tools approved for MTD.
If you’re still running your business from a notebook in the van, the time to modernise is now.
5. Use Tax Structures in Your Favour
Raj walked through several ways contractors can structure their businesses more efficiently:
Sole trader vs. Limited company
Your decision depends on your goals:
keeping lifestyle-size business → sole trader may be enough
scaling, hiring, or diversifying → limited company (or holding company structure) may offer better tax efficiency and asset protection
Plant & Machinery Allowances
The UK offers incentives such as:
annual investment allowance (AIA)
full expensing for some electric vehicles
capital allowances on commercial vehicles and machinery
These significantly reduce tax bills when buying vans or equipment.
6. Year-End Checklist: Avoid Surprises
Raj recommends every contractor review these before year-end:
estimated profits for the year
salary vs dividend mix
where you sit in tax thresholds (especially £100–£125k “62% rate” zone)
whether dividends are properly justified by company profits
any director’s loan account issues
VAT liabilities or repayments
aged debtors (customers who owe you)
aged creditors (suppliers you owe)
Planning ahead means the tax bill is never a shock.
Final Thoughts
Whether you’re a sole trader plasterer or running a team of 20 electricians, the principles are the same:
Know your numbers.
Track projects individually.
Bid with proper margins.
Use software to stay on top of cashflow.
Plan tax strategically, not reactively.
Don’t run your business from your bank balance.
Tools like Assemble Pro help contractors understand project costs, margins, takeoffs, and estimates clearly so surprises become rare, not routine.
A huge thanks again to Raj at Five Rivers Accountancy for sharing his insights. If you’re in the UK and need an accountant who genuinely understands the construction world, Raj comes highly recommended.
