A full order book can hide a business that is going backwards. Our podcast guests keep returning to the same five numbers, and the national failure data shows why they matter.
A builder can have a full order book and still be going backwards.
That was the sharpest point Mark Vassallo and Paul Hogan of Dixon Homes Sydney made when they sat down with Az on our podcast this month. Other guests have made it all year in different words. Busy describes how much work is signed. Healthy describes whether that work makes money, turns into cash and leaves the business able to pay what it owes.
The gap between the two is where building businesses fail.
Why do busy building businesses still fail?
ASIC insolvency statistics show 3,472 construction companies entered external administration or had a controller appointed for the first time in the year to 30 June 2026. That was down from 3,596 the year before. Construction still accounted for 24.5 per cent of all company failures nationally, more than any other industry.
The more useful data is why. Where an external administrator lodges an initial report with ASIC, it nominates the causes of failure. In the latest year published, the year to 30 June 2025, construction accounted for 2,361 of those reports.
Inadequate cash flow or high cash use was nominated in 56.3 per cent of them. Poor strategic management appeared in 52.6 per cent, trading losses in 47.6 per cent, and poor financial control, including a lack of records, in 40 per cent. Administrators can nominate more than one cause, so the figures overlap.
Almost two thirds of those companies, 63 per cent, had fewer than five full time equivalent employees.
None of those causes is a building problem. Vinnie Vecchio, who leads the coaching team at The Professional Builder, described the pattern on our podcast. In his words, “the number one challenge or constraint that pretty much every builder will run into, or currently is right now, by a country mile, would be cash flow and financial control.”
What does gross margin per job show that the year end figures hide?
Most builders track margin across the year. The more useful measure is margin by job, against the estimate it was priced on.
Measured across a whole year, one good job can cover for a bad one. Measured job by job, the bad one shows up while there is still time to price the next one differently.
Josh, founder of Elevate Estimate, worked with more than 56 builders in a single year. The problem he sees most is pricing from numbers that no longer exist. “They’re using outdated rates, they’re using outdated square metre rates, which you can’t do. And it’s forever changing.”
His view of why it matters is just as direct. “Estimating is the heart of the business. If that is going really well, generally the rest of the business has gone really well.”
How much overhead does each job have to carry?
Overheads are the fixed costs of running the business that sit outside any one job, and they decide how much margin a builder needs just to stand still.
Vassallo described margin and overhead as the main risk for builders who are not also developers. Staff, display homes and large marketing budgets lift overhead quickly, creating a business that needs high volume simply to break even. Dixon Homes Sydney runs the other way, with a small team, automated drafting and estimating, and no large display footprint.
Hogan, who leads sales, framed the link between volume and delivery. “Every sale is a promise that the rest of the team have to deliver.”
How much of the work on hand can actually start?
A signed job is not revenue. Vassallo’s point is that a pipeline only pays once the build begins. “Until you build the house or start building the house, a builder doesn’t make any money,” he said. “And in fact it costs money to work on a pipeline that is in the long term.”
That is why Dixon Homes Sydney does not quote on unregistered land unless registration is three to four months away. A quote on a lot that will not register for 18 months assumes site conditions nobody has seen, at prices that will move.
A signed job is not revenue. A pipeline only pays once the build begins.
The number that matters is months of work that can start, priced from current costs. Everything else is a list of conversations.
How long does an invoice take to become cash?
Work that has been invoiced but not collected is exposure, not revenue. Vecchio breaks bad cash flow into five causes, and two of them sit here: how often a builder can claim, and how quickly debtors pay.
On claim frequency, he uses a million dollar project with eight claimable stages across a 12 month build. “Meaning you get paid eight times over a 12 month period, which means there’s four months you won’t get paid,” he said.
Chris, a partner at insolvency firm Jirsch Sutherland, described the same mismatch from the other end. “You’re only getting your money from your customer once every 120 days, once every 90 days. But you’re paying the subbies every seven days, every fourteen.”
Debtor days is the measure of that gap. Poor management of accounts receivable was nominated in 18.5 per cent of construction failure reports in the year to 30 June 2025.
Can the business cover what it owes over the next year?
How the QBCC counts the current ratio
The QBCC calculates the current ratio as current assets divided by current liabilities, and expects at least $1 of current assets for every $1 of current liabilities. Its guidance includes work completed but not yet invoiced, at the cost of materials and labour, in current assets. Holding a ratio of at least 1 is a condition of holding a Queensland licence at all times.
In Queensland it is a licence condition. The QBCC Minimum Financial Requirements require licensees to maintain a current ratio of at least 1 and net tangible assets of at least $0, plus a higher minimum tied to turnover. Holders of a builder licence need at least $46,000. The regulator’s regulatory guide also requires quarterly management accounts.
Queensland is where the ratio is written into licence conditions. Wherever a builder works, it measures the same thing: whether a business can pay its bills as they fall due.
Why does visibility sit underneath every other number?
Vecchio rates the fifth cause of bad cash flow highest. “The fifth one, and probably the most important one, is visibility,” he said. “And this is the one that ties into financial control, is that builders just might not know their numbers.”
Visibility is what lets a builder see the other four. Without it, a margin problem, an overhead problem, a pipeline problem and a debtor problem all feel the same: not enough money in the account.
When Az asked Chris what makes a good builder, his answer landed in the same place. “Know your numbers. Know where you’re losing the cents in the project, where you’re hemorrhaging money.”
The Good Builder Take
Most builders can say how many jobs they have signed. Fewer can say what margin each one is making, how much overhead it carries, how many can start this quarter, how long their debtors take to pay, and whether current assets cover current liabilities.
The failure data says those five numbers are where building businesses are won and lost. None of them needs a finance degree. They need records kept well enough to read.
A full order book looks like safety. Across this year’s conversations, our guests have described the same thing from different seats. The businesses that come through quieter periods are the ones that could see these numbers before the bank balance showed them.
Frequently asked questions
A busy builder has plenty of signed or quoted work. A healthy builder has work that can actually start, priced from current costs, with a margin on each job that covers overheads and leaves profit. A full pipeline of jobs that cannot start, or that were priced too thin, can make a business look busy while it loses money.
In ASIC’s initial external administrators’ reports for construction companies in the year to 30 June 2025, inadequate cash flow or high cash use was nominated in 56.3 per cent of 2,361 reports. Poor strategic management appeared in 52.6 per cent, trading losses in 47.6 per cent and poor financial control, including a lack of records, in 40 per cent. More than one cause can be nominated in each report.
ASIC data published on 19 October 2026 shows 3,472 construction companies entered external administration or had a controller appointed for the first time in the year to 30 June 2026, down from 3,596 the year before. Construction was 24.5 per cent of all company failures, the highest of any industry.
Under the QBCC Minimum Financial Requirements, Queensland licensees must maintain a current ratio of at least 1, meaning at least $1 of current assets for every $1 of current liabilities, and net tangible assets of at least $0, plus a higher minimum tied to turnover, which is at least $46,000 for a builder licence. The requirements must be met at all times as a condition of holding a licence.
In ASIC’s initial external administrators’ reports for construction companies in the year to 30 June 2025, poor management of accounts receivable was nominated in 18.5 per cent of 2,361 reports. Inadequate cash flow or high cash use was nominated in 56.3 per cent. More than one cause can be nominated in each report.
Related articles
- Busy Is Not Healthy: What 60 Years Inside Big Builders Taught Two Sydney Directors
- If You Don’t Know Your Numbers, You’re Flying Blind: Why Estimating Is the Heart of Every Building Business
- The Grim Reaper Wants to Keep Your Business Alive
- Brisbane Builder Mathew Vanstyn Deliberately Capped His Own Growth, and It Made Vanstyn Constructions Stronger
Listen to the full conversations with Mark Vassallo and Paul Hogan, Vinnie Vecchio and Chris from Jirsch Sutherland on The Good Builder Podcast, wherever you get your podcasts.
Last updated: 26 October 2026. ASIC Series 1 figures as published 19 October 2026. ASIC Series 3.2 figures cover 1 July 2024 to 30 June 2025, the latest year published.
General Information Only: This article provides general information only and does not constitute financial, accounting, legal or professional advice. It summarises views expressed by guests on The Good Builder Podcast and publicly available data at the time of writing. Licensing and financial requirements differ between states and territories. Readers should seek independent advice tailored to their own circumstances before making business decisions.
Author: TGB Editorial
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