Cash flow is the lifeblood of any business. Even profitable companies can run into trouble if money isn’t available when bills fall due. For small and medium enterprises (SMEs) in Penrith, the Blue Mountains and Western Sydney, managing cash flow is vital for stability and growth. Here are practical strategies, backed by guidance from the Australian Taxation Office (ATO), to help you stay ahead of the game.
Why Cash Flow Matters
Cash flow is the money going in and out of your business—income from sales and money spent on expenses. Having enough cash at the right time makes it easier to pay suppliers, staff and the ATO. Planning your cash flow allows you to prepare for large expenses, manage tax obligations and seize growth opportunities.
Prepare a Cash Flow Budget or Projection
The ATO recommends creating a cash flow budget or projection as the best way to ensure you have funds available for obligations. A budget helps you see your likely cash position at any time, identify fluctuations, and plan for tax payments and major expenses.
Things to consider
- Timing: Monitor your budget monthly, quarterly or yearly and update it as your situation changes.
- Costs: Include fixed and variable costs like rent, insurance, wages, PAYG instalments and GST.
- Income: Estimate sales conservatively; adjust forecasts as you collect real data.
Invoice Quickly and Collect Payments Faster
Late payments are a common cause of cash shortages. Send invoices promptly and set clear payment terms. Offer multiple payment options, follow up overdue invoices and consider incentives for early payment. Using cloud‑based accounting software can automate invoicing, send reminders and track outstanding payments.
Use digital tools
Digital tools can streamline processes, reduce manual administration and improve cash flow. Many software packages integrate invoicing, payments, cash flow forecasting and budgeting.
Keep Good Records and Separate Business Finances
Keeping accurate records gives you the information needed to meet tax obligations and assess financial health. Good records help you lodge BAS and tax returns correctly, know which expenses you can claim, and separate business and private expenses.
- Track all income and expenses, including dates, amounts and GST information.
- Keep documents showing how estimates or calculations were made.
- Store records securely and don’t alter them.
- Retain most records for at least five years.
Use separate bank accounts for business and personal transactions. Cloud tools like Xero, MYOB and QuickBooks make it easy to maintain records and integrate with your bank feeds.
Set Aside GST, PAYG and Super in Your Cash Flow
Open a separate savings account for tax obligations and transfer a portion of each sale into it. This helps avoid nasty surprises and protects your working capital. Remember that the superannuation guarantee (SG) rate increased to 12 % from 1 July 2025. Ensure your payroll software is updated and that contributions are paid on time to avoid penalties. Single Touch Payroll (STP) requires employers to report payroll each pay cycle and to finalise by 14 July each year, so staying up to date with payroll reporting also protects cash flow.
Monitor Expenses and Adjust Quickly
Regularly review your expenses to see where you can cut costs or negotiate better terms. Look at fixed costs like rent and insurance, variable costs like inventory and utilities, and financing costs such as loan interest. Use your cash flow budget to spot overspending early and adjust accordingly. Consider consolidating debts or refinancing for lower interest rates if cash flow is tight.
Forecast Scenarios and Plan for Growth
Businesses in Western Sydney often experience seasonal fluctuations. Develop best‑case and worst‑case scenarios to understand how changes in sales or costs affect cash flow. Use sensitivity analysis to see how a 10 % increase in expenses or a delayed payment from a major customer would impact your bank balance. Having contingency plans and a buffer (e.g. a short‑term line of credit) can keep your business stable when unexpected events occur.
Leverage Digital Tools and Professional Advice
Digital tools can track and streamline processes, manage customer data, reduce overheads and support growth. You can claim tax deductions for the business portion of digital tools. Getting advice from trusted sources—your accountant, BAS agent or the ATO website—will help you navigate changes and uncertainty.
Let Carmody Accounting Help You Keep Your Cash Flow Positive
At Carmody Accounting, we’re passionate about helping Penrith and Western Sydney businesses thrive. Our team can set up or review your cash flow budget and forecasting tools, automate invoicing, PAYG, GST and super tracking through cloud accounting software, provide strategies to manage seasonal cash flow and grow sustainably, and ensure you meet BAS and STP reporting obligations on time.
Ready to get control of your cash flow? Book a free 15‑minute consultation with us and discover tailored solutions to improve your cash flow, reduce stress and set your business up for success.
FAQ
- Q1. What is the best way to improve cash flow? Preparing a cash flow budget is key. It shows your likely cash position, helps identify shortages, and enables you to plan for taxes and major expenses.
- Q2. Do I need to keep all my receipts? Yes. You must keep records of all business transactions and record the date, amount and description, including GST information. Records must be kept securely and retained for at least five years.
- Q3. How can I make sure I have enough for GST and PAYG? Set aside GST, PAYG withholding and super in a separate account as you receive income. This ensures funds are available when it’s time to lodge and pay.