Construction is the most dangerous industry in Australia to run a profitable business in. In the financial year to March 2025, 2,636 construction companies became insolvent for the first time, up 23% on the year before (Accounting Times, on ASIC data), and construction consistently accounts for the largest single share of corporate failures, at roughly 27% of all external administrations (ASIC insolvency data). The builders going under are not all incompetent. Many were profitable on paper. They ran out of cash, usually because of fixed-price contracts signed before costs moved and a cash cycle that nobody modelled.
This is a guide to what a virtual CFO does for a Sydney construction business between $5M and $15M, why the numbers in this industry mislead, and how the work is scoped.
Published: June 2026
Construction breaks the usual link between profit and cash in two specific ways, and both are structural rather than the result of bad management.
Progress claims and retention. You claim progress as work is completed, but you are paid in arrears, often 30 days or more after the claim, and the client withholds retention, commonly 5% on each claim until practical completion and a portion beyond. So your cash position trails your work by weeks, and a slice of every dollar earned is locked up for months or years. On a $10M project at 5% retention, that is up to $500,000 sitting on someone else's balance sheet while you fund the next stage of works.
Fixed-price contracts in a moving market. A fixed-price contract signed when steel and labour cost one thing, delivered when they cost more, transfers the entire cost-movement risk to the builder. ASIC and insolvency practitioners have repeatedly named legacy debt from loss-making fixed-price contracts as a primary driver of construction failures. The loss is baked in at signing and only shows up in cash months later.
Neither of these shows in a simple P&L until it is too late. They show in a cashflow forecast built around the project schedule, which is the core of what a virtual CFO does in this industry.
Construction accounting is genuinely harder than most industries, and it is where founders most often lose the thread of their own numbers.
Under AASB 15, revenue is recognised as performance obligations are satisfied. For many construction contracts that happens over time, using a percentage-of-completion approach, but there is no automatic right to recognise revenue that way. The criteria have to be met, and the method, input-based on costs incurred, or output-based on value transferred, has to be chosen and applied consistently (RSM Australia on AASB 15 in construction; Nexia Australia).
The practical consequence is a permanent gap between three different numbers: what you have billed (progress claims), what you have earned (revenue recognised), and what you have in the bank (cash). Work in progress, the costs and earned margin not yet billed, sits on the balance sheet and is routinely the most misunderstood line in a builder's accounts. Over-claiming early flatters cash and creates a liability you will have to deliver against. Under-claiming starves the business of cash it has genuinely earned. A virtual CFO's job is to get WIP, progress claims, and cash modelled together so the founder is not flying on the bank balance alone.
This is also where Chartered Accountant credentials matter. Getting revenue recognition right under AASB 15 is not a bookkeeping task, and a model built by a Chartered Accountant (CA ANZ) is one your auditor, your financier, and your surety provider can rely on.
A Sydney high-end residential builder is running $12M in annual turnover across four concurrent projects. The management accounts show a healthy net margin. The founder is comfortable. Then two things happen at once: a major project's costs run 8% over the fixed-price budget, and a client disputes a progress claim and delays payment by 45 days.
On the P&L, the margin erosion shows up slowly. In cash, it hits immediately. The business now has to fund the cost overrun and the delayed claim out of the same working capital that is supposed to fund the next project's early works. Without a 13-week cashflow forecast tied to the claim schedule and retention release, the founder discovers the problem when the bank balance does, which is the most expensive moment to discover it. With the forecast, the overrun and the delay are visible weeks out, and the founder has options: pause non-critical spend, accelerate another claim, or have the financing conversation early rather than in crisis.
The difference between those two outcomes is not luck. It is whether the cash was modelled.
Most builders model the money coming in and stop there. The money going out is just as lumpy, and the timing mismatch between the two is where the squeeze actually happens. You typically pay subcontractors and suppliers on shorter terms than your client pays you, and under security-of-payment legislation a valid payment claim from a subbie carries hard deadlines and real consequences if you miss them. So you are funding the gap between paying down the supply chain and being paid by the principal, on every project, every month.
A virtual CFO models both sides together: progress claims and retention release on the receipts side, subcontractor and supplier payment runs on the disbursements side, and the financing buffer needed to bridge the gap. That combined view is what turns "we are always tight in the middle of a project" from a recurring surprise into a planned, funded position.
Most virtual CFOs sell construction firms an open-ended retainer at $3K to $8K per month. We sell a fixed deliverable instead, because the work a builder actually needs, a cashflow model tied to the real project schedule, or a WIP-aware reporting pack, has a defined scope and a finished output.
Our front-door engagement, the 90-Day Number, is fixed scope, fixed fee, fixed timeline at $9,950 plus GST, with one named deliverable on day 90. For a construction business that is usually a 13-week cashflow forecast built around progress claims and retention, a project-level margin and WIP reporting pack, or a financing-ready model for the bank or surety. Led by a Chartered Accountant (CA ANZ). No retainer, no scope creep. On day 90 you have the model, and what comes next is your call.
Why do profitable builders go insolvent?
Cash, not profit. Fixed-price contracts that turn loss-making as costs move, plus a payment cycle where retention and delayed claims lock up cash, mean a builder can be earning margin on paper and unable to fund the next stage of works. It is the single most common pattern behind construction failures.
What is retention and how does it affect my cash?
Retention is the portion of each progress claim, commonly around 5%, that the client withholds until practical completion and beyond, to secure defect rectification. On larger projects that can mean hundreds of thousands of dollars of earned revenue sitting outside your bank account for months or years. It has to be modelled, not assumed.
How does AASB 15 change my revenue?
It can shift when revenue is recognised, based on the satisfaction of performance obligations rather than your billing schedule. Many contracts still recognise over time on a percentage-of-completion basis, but only where the criteria are met. Getting it right keeps your accounts defensible to auditors and financiers.
What does the 90-Day Number deliver for a construction business?
One named deliverable on day 90: typically a claim-and-retention-aware 13-week cashflow forecast, a project-level margin and WIP reporting pack, or a financing-ready model. Fixed scope at $9,950 plus GST, no retainer.
Do I need a full-time CFO?
Most builders below $15M do not. A full-time finance executive runs a base of $180K to $300K, closer to $250K to $350K-plus loaded with super, leave, and recruitment. The work most growing builders need is specific modelling and controls done properly, which is project work.
Is this bookkeeping?
No. Bookkeeping keeps the ledger accurate. A virtual CFO works on the forward-looking cash and margin picture: progress-claim cashflow, WIP, project profitability, and the financing conversation. Different job.
Sydney Virtual CFO is a Sydney-based virtual CFO service for founders running $3M to $15M businesses across SaaS, ecommerce, professional services, construction, and other low-volume, high-value industries. We deliver fixed-scope CFO engagements with a named deliverable on day 90: a 13-week cashflow forecast, a fundraise-ready financial model, a unit economics build, or a board reporting pack you can run on your own.
Our front-door product, the 90-Day Number, is fixed scope at $9,950 plus GST. We are one of the few project-based virtual CFOs in Australia, in a market built almost entirely on monthly retainers. No retainers without a deliverable. No 80-page reports. No theatre.
This content is general information only, written for Australian founders running businesses in the $3M to $15M revenue range. It does not constitute tax, financial product, investment, or legal advice and should not be relied on as such. The work referenced is led by a Chartered Accountant (CA ANZ), but Sydney Virtual CFO is not a licensed tax agent, not a licensed financial adviser, and not authorised to provide personal financial advice. Tax obligations, accounting treatments, fundraise terms, and statutory requirements depend on your individual circumstances. For advice specific to your business, contact the team directly or consult a registered tax agent, licensed financial adviser, or qualified lawyer. Information was current at the time of publication and may change without notice. We review and update guides periodically.
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