This is one of the most important things for any business owner to understand.
Your business can be profitable on paper and still struggle to pay its bills.
Why?
Because cash moves differently from profit.
Customers may take time to pay you. You may purchase stock before selling it. GST and tax become payable later. Equipment may require large upfront payments. Loan repayments and other commitments continue regardless of when customers pay.
That's why cash flow matters.
What Is Cash Flow Management?
Cash-flow management is about understanding:
what money is coming in
when it is expected
what money needs to go out
when payments are due
whether the business is likely to have enough cash available.
Signs You May Need Help With Cash Flow
You may benefit from reviewing cash flow if:
sales are good but the bank balance is always low
you're regularly using personal money to support the business
customers are paying slowly
ATO payments are becoming difficult
supplier bills are building up
you don't know how much cash will be available next month
the business is growing quickly but cash feels tighter
you're planning a significant purchase or expansion.
How SKC Accounting Can Help
Depending on your needs, we can help:
cash-flow forecasting
reviewing cash coming in and going out
identifying major cash commitments
debtor and creditor trends
planning for taxation payments
working-capital discussions
identifying periods where cash may become tight
scenario planning
improving visibility over future cash requirements.
A Simple Example
Suppose you complete $50,000 of work this month.
That doesn't necessarily mean you have $50,000 available.
Some customers may not pay for 30 or 60 days.
Meanwhile, wages, suppliers, rent, GST and other expenses may need to be paid now.
Understanding that timing difference is one of the foundations of good cash-flow management.
Common Questions
Can't find your question? Email us.
My business is profitable. Why do I have cash-flow problems?
Profit and cash are different. Timing of customer receipts, stock purchases, loan repayments, tax, equipment purchases and other items can all affect available cash.
When should I prepare a cash-flow forecast?
Before you desperately need one.
Forecasting is particularly useful when the business is growing, cash is tight, you're making a major decision or you simply want better visibility over the months ahead.
Continue Learning
My Business Is Making a Profit — So Why Is There No Money in the Bank?
What Is a Cash-Flow Forecast — and How Do I Build One?
My Customers Aren't Paying Me — What Should I Do?
How Much Cash Should My Business Keep in Reserve?
Service Delivery Disclosure
SKC Accounting Financial & Advisory Services Pty Ltd trading as SKC Accounting is a licensee of Platinum Accounting Australia Pty Ltd (Platinum). Platinum is a Registered Tax Agent (Tax Agent No. 24683431). Tax agent services, including the preparation, review and lodgement of tax returns, and BAS/GST services requiring registered-agent authority, are provided through Platinum under the applicable engagement arrangements. For more information, please visit Platinum Accounting Australia.
Let’s Talk About Your Business
A useful first conversation starts with what your business does, what is creating pressure and what you would like to improve. Book a Complimentary Initial Consultation to discuss the support that may suit your circumstances.