You're Owed £250k… But You Didn't Even Know It

A few days ago, I was on a call with the owner of a cleaning and facilities management business. We were screen-sharing his Xero account, walking through the numbers together.

I opened his sales invoices, sorted them by "awaiting payment," and read out the total.

"You're owed about a quarter of a million pounds."

Silence.

Then he said: "I don't think it's that much. I'm not sure the numbers are right."

The invoices were real. The amounts were real. The overdue balances were real.

But he didn't know which ones had been paid but never reconciled, which were truly overdue, and which were never coming in.

This wasn't a small outfit. This was a £1 million FM business being run on gut feel.

And if you think this is unusual, it isn't. I've seen this exact pattern in many construction and trades firms in the last three years.

Let me show you where the hidden cash was sitting, and why so many good businesses lose control without even noticing.

The Real Cost Nobody Talks About

Here's what most people miss about messy finances:

It's not just about late invoices or bookkeeping backlogs.

It's about running your business completely blind.

This owner was making major decisions every single week:

Should we take on that new £100k project?

Can we afford to hire another site manager?

Do we have the cash to buy that van outright or do we need finance?

Should we push back on this client's 60-day payment terms?

Every decision was based on numbers that were months out of date.

He thought he had around £75k in the bank available for growth. The reality – once we factored in unreconciled payments, upcoming VAT, and truly collectible debt – was closer to £35k.

That's not a rounding error. That's the difference between confidently investing in growth and accidentally overextending yourself into a cash crisis.

And the stress that comes with it?

Constantly wondering if there's enough to cover Friday's payroll. Second-guessing whether you can actually afford that materials order. Losing sleep over whether a late-paying client is about to drag you under.

All of it completely avoidable.

What We Found in 30 Minutes

Here are the three moments where the picture became clear.

1. Unreconciled bank transactions

We opened the main business bank account in Xero.

213 unreconciled items.

Some from October. Some from September. A few going back to last summer.

In the middle of it all was a £20,000 client payment, completely unallocated. Not coded as income. Not matched to an invoice. Invisible in every report.

He had no idea that money had even arrived.

2. The sales ledger that nobody checked

Then we opened "Awaiting Payment."

Over £200,000 outstanding.

When I exported the data, roughly £50–60k was older than six months.

And one major client owing close to £100,000 – with work still ongoing.

No structured chasing. No escalation. No decision to stop work.

He was continuing to deliver for a client who was already £100k behind on payments.

3. VAT paid on money never collected

This is the one that surprises most people.

When you raise a VAT invoice, it goes on your VAT return whether you've been paid or not.

So if a client never pays, you've effectively funded the entire job yourself and paid the VAT over to HMRC from your own pocket!.

His upcoming VAT bill was around £37,000.

By cleaning up the books and applying Bad Debt Relief properly, there was legitimate scope to reduce that bill by close to £10,000.

That's £10,000 in cash freed up purely because the records were accurate.

The Decisions You're Making Blind

Here's what happens when you don't have a clear financial picture:

You take on work you shouldn't. You accept a new project because it "looks good," not knowing you're already carrying £200k in unpaid invoices. You're increasing your exposure while your cash position is getting worse.

You miss the warning signs. A client starts paying late. Then later. Then stops altogether. By the time you notice, they owe you six figures and the work is already done. With proper tracking, you'd have seen it at £20k and stopped work immediately.

You can't negotiate from strength. A new client wants 60-day payment terms. You agree because you're not sure what your current position is. If you knew you were already carrying £150k in debtors, you'd push back hard or walk away.

You waste time on the wrong things. You spend hours chasing a £2,000 invoice from last month while a £40,000 invoice from three months ago sits unnoticed. You're firefighting instead of managing strategically.

You can't plan for growth. You want to hire. You want to invest in equipment. You want to take on bigger projects. But you can't commit because you don't actually know what cash you have available.

This is what running blind costs you.

Not just money. Control. Confidence. Growth.

Your 30-Minute Hidden Cash Check

Maybe you're thinking: "My bookkeeper handles this."

Maybe they do. But when was the last time you checked?

Here's a simple 30-minute diagnostic:

Step 1: Open your main bank account in Xero

• Check the number of unreconciled items
• Scroll to the oldest date
• Look for large "Money Received" lines not matched to anything

Step 2: Open Sales → Invoices → "Awaiting Payment"

Sort by oldest and note:

• Total outstanding
• Amount over 90 days
• Any client owing more than £20k

Step 3: Open your last VAT return

• Compare your VAT bill to actual cash collected
• Look at old unpaid invoices and ask: "Are we realistically going to get this money?"

If those checks make your stomach drop – good. It means you've finally seen what's really going on.

It's far better to face the numbers now than keep guessing.

What Happens Next

Running those three checks won't fix everything overnight.

But it will give you clarity.

And clarity is the first step to control.

Once you know the real picture, you can:

• Write off the genuinely bad debts and stop paying VAT on ghost income.
• Chase the right invoices strategically instead of randomly.
• Make decisions based on actual cash, not guesswork.
• Set proper terms with new clients from a position of knowledge.
• Stop work on clients who are dragging you down

Most construction businesses don't fail because of bad work or lack of demand.

They fail because they lose control of cash.

And you can't control what you can't see.

Why Construction Businesses Fall Into This Trap

If you're turning over £300k–£500k, you can often survive with a bookkeeper, a year-end accountant, and a bit of manual chasing.

But once you're past £750k–£1m, everything changes.

Your projects become larger. Your exposure increases. Your margins tighten. Your workload explodes.

And you fall straight into the gap I see all the time:

Too big for "year-end only" service, yet too small to hire a full finance team.

So you get stuck in no man's land.

Debtors pile up. VAT bills balloon. Cashflow becomes unpredictable. The numbers become impossible to trust.

You think you've got a bookkeeping problem.

What you actually have is a finance function problem.

And that's where the hidden cash builds up – quietly, month after month.

The Real Danger

The business I mentioned will recover some of that money. Some invoices will turn out to be paid but unreconciled. Some will be written off. Some will be chased properly and collected.

But none of that can happen until the owner knows the real picture.

And that's the real danger:

You don't lose money because clients don't pay. You lose money because you didn't know who wasn't paying.

That's the difference between a £250k shock and a £250k recovery.

If you do nothing else this week, log into Xero and run those three checks.

Your hidden cash might be sitting right there.