Cash Flow For Business.


Cash Flow management is important to any business, especially small to medium-sized businesses.

For small to medium businesses, it is often difficult to gain your clients in the first instance; therefore you want to ensure you are earning income from any clients in which you attract.

A client, who is not paying for their service, is not a client worth having.

When a Business ceases there operations within the first 2 years, it can be often contributed to 2 things,

There has been no planning done for their Business.

  1. They have not monitored their cash flow management adequately, or they have spent more than they earn.

Tips for you to consider in improving your cash flow.



  1.  Ensure you set aside regular time to complete your invoice for the services, products you are providing,
  2. Ensure you set aside regular time to check your bank account to ensure your clients have paid you, and in a reasonable time
  3. Ensure you understand all your costs within your Business to ensure you are pricing everything correctly




  1. Set yourself an Annual Budget
  2. Stick to the budget you set- where possible
  3. Record all your expenses and monitor such expenses
  4. Ensure sufficient income before paying an expense
  5. Maintain the money in your account for as long as possible
  6. Keep on top of clients who owe you money.
  7. Ensure you have your terms and conditions known.
  8. Investigate bank fees and other charges in which you are paying- can you get a better deal elsewhere
  9. If a sole trader- ensure you have a Business bank account and a personal bank account
  10. Compare your financial reports from year to year, quarter to quarter.

Understanding your financials can help you understand your true financial position, yes you can simply record income and expenses to ensure you comply with the ATO requirements, or you can learn more about your financials to ensure.

Setting your budget each year, it is recommended to do this for each financial year, however many businesses do it for the Calendar year, it really depends on when your planning year is.

Budgets are good, as you can then see if there are months, in which you expect a shortfall in income to cover the costs, which can help you with your marketing plan, to know which months you need work, and therefore clients. However always remember if your clients are on a 30-day account, the work needs to occur, prior to the month, to ensure they have time to pay.

If a client has not paid, they are not worth having, e.g. if they owe you 5 months’ work, which might total $3000-$5000, they are not worth having, despite the income looking good on your books, as it is not actual money in your account, until they pay.

Ensure you know how long it takes each client to pay for your services/ product, especially if you offer payment terms, this can help you understand your cash flow. Ensure you check your accounts each week to know who has paid and who has not, and be aware of late payers. Remember if someone pays late, pick up the phone as soon as possible, and remind them that their payment is overdue, try to get some sort of firm commitment out of them, on when they are only to pay- even if it needs to be in installments- some money is better than none.

It is important to have a good mix of clients, e.g. ones who pay on a 7-14 day account, ones who pay on a 30-day account, and then the bonus might be clients who pay 45 days from the end of the month etc. If all your clients only pay 45 days from the end of the month, it can make cash flow difficult.

I have seen Business owners, who only do work for their Local or State Governments, which is great having Government clients. However, the majority of these clients will pay the 45 days or so from the end of the month, and also some businesses may have regular work for these agencies, without cash flow in the bank, it is difficult and stressful for you to pay suppliers, staff, and expenses.

This is why if you contract to the Government, you also need to have a mix of private clients, this is important, and helps your cash flow.

The majority of the above, can only really occur, if you are a proactive Business owner who understands their finances, to ensure they understand their financial position.

Okay, you might not have trained in the financial sector, and may not understand Numbers, this is okay, as all Business owners have a weakness, however, my recommendation is for you to ensure you find a good Bookkeeper/ Registered BAS Agent/ Accountant who can assist you with understanding. However, when searching for one, ensure they can communicate the information to you. Many have the knowledge, but communication skill is not perfect and therefore is unsure on how to pass the information on to you. Therefore, it becomes a waste of your money and time, because you are not receiving the information you need.

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