Plumbing and heating business finance: vans, tools, stock and cash flow

• Domestic plumbers and heating engineers adding a van or an apprentice.
• Gas engineers moving into commercial boilers and plant rooms.
• Heat pump and renewable heating installers scaling up.
• Mechanical subcontractors working for main contractors on housing or commercial jobs.

Electricians face many of the same issues, and our page on electrical contractor finance covers that trade.

Installers moving into low carbon heating need cash to carry the work. Under the Boiler Upgrade Scheme in England and Wales, GOV.UK lists grants of £7,500 for an air source or ground source heat pump. Customers must use an MCS certified installer, the installer applies on the customer's behalf, and the grant is taken off the amount the customer pays. That means the installer is funding the grant element of each job until the claim is settled, on top of buying the equipment, so cash flow planning matters as volumes grow. Check the current rules on GOV.UK's Boiler Upgrade Scheme pages, which can change. For businesses installing renewable systems more widely, our page on green business finance may help.

Gas work is regulated too. HSE says anyone employed to work on gas appliances in domestic premises must be Gas Safe registered and competent in that area of work, and lenders funding a gas business will expect that to be in place.

Illustrative example only, not a quote. A heating firm with two engineers wins a contract to fit systems on a new housing phase. It buys a second van on hire purchase, so the cost is spread over several years. The contractor pays on applications, with CIS deductions taken, and payment arrives well after the materials have been bought. The firm uses selective invoice finance against the contractor's certified applications, drawing cash as each one is approved. Domestic work continues to be paid on completion and is left out of the facility.

Compare the total cost of each option, including arrangement fees, early settlement terms and, for invoice finance, service charges and any minimum term or notice period. Asset finance may need a deposit. Pricing depends on the business and the facility, so we lay out each offer's full cost side by side.

For a one-off cash need, an unsecured business loan can be simpler than an invoice facility. Trade accounts with your merchant spread the cost of stock, and some firms use a revolving facility for materials.