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The trusted trader register and your cash flow

The government has set out a trusted trader scheme and a milestone payment system. Here is what both change for a small trades business.

Reading time 3 min read
Category Business guides
Written by The bizbritain team
The government has announced a trusted trader scheme and a new way for customers to pay for building work. Both are good news if you run an honest trade. Both also change when money reaches your bank account.

Section 01

What the government announced

According to the government, a trusted trader scheme will launch in September. Businesses will be able to sign up to an approved code. The code shows a customer that the business meets a set standard.
A second measure changes how customers pay. The government said the new system lets customers avoid paying large sums up front. Payments are linked to project milestones instead.
The same announcement covered private bailiffs. In England and Wales they will need accreditation from the Enforcement Conduct Board.
According to Citizens Advice, more than 25% of adults have had a problem with home improvement work. That is the problem the scheme is aimed at.
One caveat worth noting. The announcement did not set out which UK nations the trader scheme will cover. Check that detail when the scheme opens.

Section 02

Why milestone payments change your cash flow

Milestone payments protect the customer. They also move your money later in the job.
Think about a kitchen fit. You buy the units, the worktop and the fittings before you start. Under a deposit, the customer helps fund that. Under milestone payments, you fund it, then get paid when the stage is signed off.
The job is the same size. The gap between spending and being paid is longer.
That is not a reason to stay off the register. A visible standard should win you work that used to go to a cheaper quote. It is a reason to know your numbers before you sign up.

Section 03

What to get ready before the register opens

None of this needs the scheme to be live. All of it helps when it is.

  1. Your paperwork

    Public liability insurance, trade qualifications and your registration details. An approved code will ask for proof, not a claim.

  2. Quotes broken into stages

    Split each job into stages and put a price against each one. If payment follows milestones, your quote has to name them.

  3. Reviews you can point to

    Ask recent customers for a review while the work is fresh. A homeowner reads those before they read any logo.

  4. A materials float

    Work out what one typical job costs you before the first payment lands. That figure is the gap you need to cover.

  5. Books that are up to date

    Clean accounts make everything else faster, including any funding application.

Section 04

Where funding fits

Funding is for a gap, not for a hole. If the numbers only work with borrowed money every month, borrowing will not fix that.
There are three situations where it earns its place.
  • The materials gap. You pay for stock and labour before the first milestone clears. Working capital covers that gap and is repaid as the stages complete.
  • The step up. A place on an approved list should bring bigger jobs. A second van, a first employee or better tools often come before the income does.
  • Going out on your own. Moving from employed to self-employed means the set-up costs land first.
Start Up Loans is one route worth knowing about. According to Start Up Loans, it lends £500 to £25,000 per founder, and up to £100,000 per business where there is more than one owner. A business can apply if it has been trading for up to 60 months.
bizbritain is a Start Up Loans Business Support Partner. We help you prepare the business plan and cash flow forecast before you apply. For larger amounts, we look across the market and match you to lenders who understand trades.

For the larger amounts, start on our funding for growth page. Tell us what the job pipeline looks like.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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