Is Your Business Cash Flow Healthy? How to Check, Fix, and Future-Proof Your Finances
Cash flow isn’t just a line on your financial reports, it’s the oxygen that keeps your business alive. If you’ve ever had to delay paying a supplier or worried about covering wages, you already know how critical it is.
For Australian small businesses, managing cash flow well can be the difference between sustainable growth and sudden closure. While profit tells you if your business is viable, cash flow shows whether your business is survivable.
So, how can you tell if your business is cash-flow healthy? Let’s take a look.
Common Pressure Points That Disrupt Cash Flow
Your cash flow can be influenced by many factors, including:
- Seasonal dips in sales
- Customers paying late
- Equipment upgrades or asset purchases
- Economic changes or interest rate hikes
- Changes to supplier or employee costs
- Expansion into new products or markets
Understanding what’s impacting your cash inflow and outflow is the first step to taking back control.
Five Signs Your Cash Flow Needs Attention
Here are some key red flags to look out for:
- You’re regularly using your overdraft or credit card just to get by
- Suppliers are following up because your bills are overdue
- You’re uncertain how much cash is available next month
- You’re delaying tax payments or superannuation contributions
- Growth is on hold because you can’t fund it confidently
If any of these sound familiar, it’s time for a check-up.
Practical Tips to Strengthen Your Cash Flow
You don’t need complex financial models to get started. Here are some actionable steps you can take this week:
Forecast, Don’t Just React
Set up a basic 90-day cash flow forecast. Use your historical income and expense data to project what’s ahead. This allows you to plan, not panic. When expenses or quiet months arise.
Tighten Your Invoicing Process
Send invoices as soon as work is completed, and follow up with automated reminders. Consider moving to 7 or 14-day payment terms, especially for smaller jobs or repeat customers.
Renegotiate Supplier Agreements
See if suppliers can offer longer payment terms or discounts for early payment. You might also uncover better deals elsewhere, especially on things like software, telephone, internet or insurance.
Cut or Reallocate Unused Expenses
Audit your software subscriptions, utilities, and services. Are you paying for tools no one uses? Could you sublet part of your office or move to a hybrid model?
Free Up Locked-In Capital
If too much of your capital is tied up in stock or slow-paying invoices, explore options like inventory reduction strategies or invoice finance (just ensure you understand the costs involved).
Optimise Before You Expand
Planning to grow? Don’t scale your cash flow problems along with your business. Before you invest in new staff, a second location, or marketing campaigns, ensure your cash flow can support the next step.
A healthy, well-managed cash flow ensures you can:
- Seize new opportunities confidently
- Avoid “feast or famine” cycles
- Protect your business during downturns
- Improve your borrowing potential with lenders
When It’s Time to Ask for Help
Sometimes it takes a fresh set of eyes to spot what’s draining your cash flow. At SKD Accountants, we help small businesses across Australia identify hidden risks, fix leaks, and build a financial game plan for long-term success.
We can assist with:
- Custom cash flow forecasting
- Tax and compliance planning
- Growth strategy and funding advice
- Xero and MYOB setup and training
- Debt management and budgeting
Want practical advice you can apply straight away? SKD Accountants offer a free, no-obligation 30-minute consultation to help you understand your numbers and improve your financial resilience.
Let’s get your business financially healthy and ready for anything.