In a CommBank survey of 507 small and medium business owners and decision makers, run by YouGov in late 2024 and published in January 2025, nearly 80% of Australian small to medium businesses said they had felt a cash flow hit in the previous 12 months. The most common causes for this are declining revenue (35%), low cash reserves (30%), and seasonal fluctuations (27%).
While you may know you’ll be able to cover your expenses, sometimes the timing of bills, a large BAS (the PAYG instalment part is worked out from last year’s income), or paying contracts in advance can put pressure on your business.
Cash flow management is the practice of managing when money comes in and when it goes out, so you can make sure you always have enough cash to pay your bills, staff, and taxes on time. In addition to having the cash on hand to pay your expenses, better cash flow management can also help you confidently fund growth.
Cash flow basics every business owner should know
Before you can start forecasting the year ahead or planning for growth, it’s key that you understand the core concepts of cash flow management.
Here are some basic terms you’ll need to understand before we get into deeper strategy.
Cash flow statement
A report that shows how much cash has moved in and out of your business over a period. It helps you see whether you’re generating enough cash to cover day-to-day operations. They are often put together monthly, quarterly and annually with varying degrees of depth.
Cash inflows and outflows
- Inflows refer to the money coming in, like customer purchases, funding, and loans.
- Outflows are the money going out, including wages, rent, suppliers, and taxes.
The number one reason people run into cash flow problems is because their outflows are due before their inflows arrive. This means they should have the money to pay, but they don’t have the cash in their account to do so.
Operating and non-operating cash flow
- Operating cash flow comes from your business activities, like the sale of products or services.
- Investing and financing cash flows include asset purchases and borrowing respectively. Income-tax payments and refunds are normally operating cash flows, unless specifically identifiable with investing or financing transactions. A refund is not non-operating simply because it happens once.
Separating the two gives you a more accurate view of how your business is performing.
For example, if your cash flow is constantly up due to non-operating cash flow like loans, but you aren’t building operating cash flow from sales, without a new strategy, you will run into problems when your loan runs out.
Cash flow and profit
- Profit shows whether your business is earning more than it spends on paper.
- Cash flow shows whether the money is actually in your bank account.
A business can be profitable but still run into cash flow issues if customers pay late or expenses are paid upfront.
The reverse also happens. Many fast-growing startups run at a loss for years, funded by investors’ money (non-operating cash flow) while they grow towards profit. They have cash, but not profit.
Understanding cash flow forecasting
Cash flow forecasting is one of the most informative tools you can use to help your business stay in control of its finances.
This practice can help you anticipate when money will come in and go out, so you can plan ahead rather than scrambling for cash when bills are due. On top of covering your outflows, a clear forecast can help you make decisions around hiring, investing, or when to make large payments.
Most businesses use two types of cash flow forecasts, each serving a different purpose.
| Forecast type | Timeframe | What it’s used for |
|---|---|---|
| Short-term | A weekly view of the next three months. | Managing day-to-day cash, covering wages, BAS, rent, or supplier payments. |
| Long-term | Monthly view over the year ahead. | Planning growth, budgeting, funding decisions, and accounting for seasonal fluctuations. |
Used together, these forecasts give you both immediate visibility and a longer-term view of your business’s financial position.
How to forecast cash flow (with examples and templates)
The good news is that you don’t need to be a financial genius to put together a basic cash flow forecast. In its most basic form, a financial forecast is a map of all your expected inflows and outflows.
In Australia, it’s important to have this mapped out as it will help you lodge an accurate BAS (GST, PAYG withholding and PAYG instalments) and pay superannuation to your employees’ funds on time.
To get you started, here’s how you can go from raw numbers to real visibility in a few simple steps.
Step 1: Set up your spreadsheet
Open Excel or Google Sheets and create a table with columns for each week or month (depending on whether you are doing a three-month or yearly forecast), and in the rows list the following categories:
- Opening cash balance (what you currently have in your business account)
- Cash inflows
- Cash outflows
- Net cash movement
- Closing cash balance
Under each of these categories, we will add more detail. For example, under cash outflows, we might add a few rows for wages, rent and utilities, tax, loan repayments, and supplier bills and subscriptions.
Step 2: Gather all your historical data
The best indicator of how your business will perform tomorrow is how it performed yesterday. Pull all your historical data from your accounting software, bank statements, and payroll reports.
Try to include at least the last six to 12 months to get a good feel for your typical income and expense patterns, and any seasonal fluctuations. For example, depending on your industry, December may either be your busiest or quietest time of year. Use this data to fill out your spreadsheet using the averages.
Step 3: Identify recurring inflows and outflows
Add all the payments you make regularly. This could be rent, software subscriptions, employee wages, loan repayments or anything else that constantly needs to be paid.
You’ll also want to note down the recurring money coming into your business. This is particularly clear-cut for businesses that sell subscription services. It could also be the average sales amount you made across the last 12 to 24 months.
Step 4: Add known future events
You’ll also want to layer in anything you already know is coming up. This often includes BAS and GST payments, superannuation, PAYG withholding, planned purchases or hiring. Since 1 July 2026, under Payday Super, super is paid with each pay run and must reach the employee’s fund within 7 business days of payday, so forecast it in the same weeks as wages rather than quarterly.
Step 5: Stress-test your forecast
Duplicate your spreadsheet and adjust your assumptions to see how your business will manage different scenarios. Try testing the following:
- Best case: Customers pay on time, sales steadily increase.
- Likely case: Payments arrive as expected.
- Worst case: Large customers pay late, costs rise, or you receive a large (but realistic) unexpected bill.
Compare the closing balances. If any scenario shows cash dropping too low, see how you could adjust the months before the shortfall to cover it.
Free templates
If you’d rather not build your forecast from scratch, you can download free cash flow forecast templates from these resources:
Tips for short-term cash flow management
Now that you have all your cash flow forecasted, you can start to employ strategies to ensure you have enough cash on hand to cover upcoming costs. Here are some popular ways to ensure you have enough cash flow in the short term.
Speed up your receivables
Always send an invoice as soon as work is complete. Make sure it has clear payment terms, and follow up consistently. Using accounting software to automate reminders or offering small early-payment discounts can help if you are constantly having invoices paid late.
Manage payables strategically
When possible, negotiate longer payment terms with suppliers. Try to schedule these bills to fall right before their due dates rather than paying everything immediately. This will give you more cash on hand when you need it.
Control your inventory
Cash tied up in stock you can’t move could have been used elsewhere. To avoid this, track your inventory turnover and avoid over-ordering, especially for slow-moving items.
Plan for wages and tax
Treat wages, superannuation, GST, and PAYG withholding as committed outflows in your forecast and set the money aside as soon as income comes in: set aside 1/11 of each GST-inclusive receipt as it lands, since GST and withholding move with sales and wages rather than staying fixed.
Use short-term finance sparingly
Overdrafts or loans might help cover timing gaps, but they’re not a good long-term solution to ongoing cash shortfalls. Don’t lean on them as a part of your business process and instead only use them in emergencies.
Strategies for long-term cash flow planning
Long-term planning is what can take you from month-to-month survival to being able to reinvest in the growth of your business. Here are some strategies that financial advisers use to help businesses plan their long-term cash flow.
Link budgets to your cash forecast
Once you have your budget, you’ll want to connect it directly to your cash flow forecast, since budgets don’t always account for timing. For example, buying more stock at a wholesale price might look affordable, but if it creates a short-term cash gap, you may end up paying more in interest if you need to borrow money to cover that temporary shortfall.
Build a cash buffer gradually
Aim to build a cash reserve that covers two to three months of essential costs like wages, rent, and tax. You don’t need to do this all at once. Instead, set aside a portion of your surplus cash during stronger months.
Diversify how revenue comes in
Relying on one major client or a single revenue stream does increase your level of risk. Consider getting clients on retainers, offering subscriptions, or branching into a new industry. For example, a local bakery could start offering corporate catering services.
Review your fixed and variable costs
Go through your costs and separate the ones that stay the same every month from the ones that move around (like contractors or ad spend). This makes it much easier to see where you have room to slow spending during quieter periods, without putting day-to-day operations at risk.
Set times to review your forecast
Update your cash flow forecast each month to reflect any changes in income, costs, or timing. It’s also helpful to do a deeper review each quarter to check whether your strategy is working and to spot any upcoming cash flow shortfalls early.
Tools and tech to support cash flow management
You would be hard-pressed to find a business in Australia that doesn’t use some form of technology to manage their cash flow. Here are the common types of technology businesses use and how they help.
| Tool | What it’s useful for |
|---|---|
| Spreadsheets | These work for small businesses, simple forecasts, short-term planning, and quick scenario testing. They can be flexible, but require manual updates. |
| Accounting software | These tools can automatically track inflows and outflows, reconcile accounts, and generate cash flow reports from real data. This adds an extra level of insight. |
| Forecasting software | Specialised tools for forecasting typically use live financial data to make forward-looking forecasts and run scenarios with less manual effort. |
At Visory, a dedicated team runs your bookkeeping, payroll, accounts payable and receivable, with its AI, Delphi, overseen by that team. You can see your numbers on the Visory platform, and Visory Insights gives you a plain-English monthly read of them, walked through with a Business Performance Partner who helps you turn them into decisions.
When to seek expert help
Managing cash flow on your own can work when your business is simple and stable. However, as things get busier or more complex, it’s easy for forecasting and planning to fall behind.
It may be time to seek support if you’re short on time, want greater peace of mind, or have bigger plans you’re working towards, like expanding your headcount, entering new markets, or investing in growth. We also recommend getting help if your cash flow feels unpredictable, reactive, or if you’re relying on rough estimates instead of your actual numbers.
If you’re curious how expert support could give you clearer cash flow visibility and more confidence in your decisions, book a discovery call.
Taking control of your cash flow
Cash stress can come from insufficient revenue or margins, as well as the timing of receipts and payments. Check both operating performance and payment timing before choosing a remedy. Through understanding how cash moves through your business, you’ll be able to forecast realistically and put both short and long-term strategies in place.
If you’re ready to have visibility over your cash and support planning for what’s next, Visory can help. Our team works alongside you to turn your numbers into insight.
See how Visory works in practice, or read more about our bookkeeping services.
FAQs
How much money should I have set aside for my business?
Many accountants and advisers suggest it’s smart to have enough cash on hand to cover two to three months of your essential expenses. For bigger businesses or in industries where there is a lot of fluctuation, you may want to have six months set aside.
How do Australian businesses manage their cash flow?
Most Australian businesses use a mix of cash flow forecasting and budgeting to make sure they have cash on hand when they need it. This often includes tracking inflows and outflows monthly, and putting money aside in advance for tax and wages.
How do you make sure you have enough money set aside for BAS in Australia?
The simplest approach is to set aside GST and tax as income comes in, rather than waiting until BAS is due.
Many businesses move this money into a separate account and use a cash flow forecast to estimate upcoming GST, PAYG, and other tax payments well in advance, so there are no surprises when deadlines arrive.
Sources
- Commonwealth Bank, CommBank small business cash flow research (YouGov, January 2025).
- business.gov.au, Set up a cash flow statement.
About this article
Written by Jack Bickersteth. Published . General information for Australian businesses, not advice for your situation.
