Cashflow Planning for Small Business – Mastin Harris Accountants

Why cashflow planning matters

Most small businesses don’t fail because they’re “unprofitable” — they fail because they run out of cash at the wrong time.

Stability

You can pay suppliers, staff, ATO obligations and yourself without panic.

Control

You make proactive decisions (pricing, expenses, stock, hiring) instead of reacting late.

Growth

You know when you can afford growth, and when growth will strain cash (it often does).

Tell it like it is: if you don’t forecast cash, you’re basically running the business from your bank balance. That works until it doesn’t — usually right before BAS, payroll, or a big supplier bill.

Common pitfalls when you don’t plan cashflow

These are patterns we see repeatedly in small business clean-ups.

Cashflow traps

Growing sales but cash still tight (receivables and stock chew cash).
Underquoting / underpricing (margin doesn’t cover overheads and tax obligations).
Relying on one big client (late payment becomes a crisis).
Using GST collected as working capital (then BAS hits and the money’s gone).
Taking drawings without a plan (no buffer for quiet months).

Operational traps

No debtor follow-up process (invoices drift).
Bookkeeping done late, so the numbers are old and decisions are guesswork.
Payment terms mismatch (pay suppliers fast, customers pay slow).
Short-term loans/BNPL stacking up (repayments quietly choke cashflow).
Big expenses not planned (insurance, rent increases, annual renewals).

Best-practice cashflow habits (what good businesses do)

You don’t need a complex model. You need consistency.

Weekly habits

Update bank reconciliation and review cash position (10–15 minutes).
Chase overdue invoices (make it routine, not awkward).
Review upcoming supplier payments and defer non-essential spend if needed.
Keep a minimum cash buffer (even a small one beats zero).

Monthly / quarterly habits

Update a simple 13-week rolling cashflow forecast.
Set aside for ATO obligations (GST, PAYG withholding/instalments) as you go.
Plan payroll and super contributions ahead of due dates.
Review pricing and gross margin (if margin is wrong, cashflow will always be wrong).
Review subscriptions, finance costs and overheads for “silent creep”.

Best practice shortcut: Many well-run businesses maintain a separate “tax/BAS” bank account and transfer a fixed percentage of revenue into it each week. It’s not perfect — but it stops accidental spending of money that isn’t really yours.

A simple cashflow forecast (no spreadsheets required to start)

If you only do one thing, do this. A forecast is just timing.

Step 1: In

List expected customer receipts by week.
Use realistic payment behaviour (not invoice dates).
Flag “big client” risk.

Step 2: Out

Rent, wages, suppliers, loan repayments.
ATO and super allowances.
Include annual bills pro-rata (insurance, licences).

Step 3: Actions

If a dip is coming: chase debtors early.
Negotiate terms before it’s urgent.
Pause discretionary spend.

Once the simple version is working, we can build a more detailed forecast and link it to your accounting system.

Case studies (good and bad)

Same industry. Similar turnover. Very different outcomes because of cashflow discipline.

Good case study: “Boring and profitable”Best practice

A small services business invoices weekly, follows up debtors every Monday, and keeps a 13-week rolling cash forecast. They transfer a percentage of revenue into a separate “GST/ATO” account each week.

When two clients pay late, it’s annoying — but not a crisis. They saw the dip coming and slowed discretionary spending for a month.

Outcome: BAS and payroll are paid on time, suppliers stay happy, and the owner can plan growth without guessing.

Bad case study: “Sales up, cash down”Avoid this

A similar business grows fast, but doesn’t watch debtor days. They pay suppliers quickly, let customers drift, and spend GST collected. Bookkeeping is done late, so they don’t see the problem building.

BAS lands and they can’t pay. They scramble with short-term borrowing, which adds repayments and squeezes cash even further.

Outcome: ongoing stress, late fees/interest risk, damaged supplier relationships, and growth stalls.

Quick wins if cash is tight right now

These are practical steps. Some are uncomfortable. They work.

Immediate actions

Call top debtors today and agree a payment date (confirm in writing).
Stop non-essential spend for 30 days (subscriptions, new equipment, “nice to haves”).
Re-negotiate supplier terms before you’re overdue.
Review pricing on your top services/products (small moves can be powerful).

System fixes

Introduce deposits/progress payments where possible.
Set invoice terms and enforce them consistently.
Put a weekly cashflow review in the calendar (even if it’s just you).
Separate bank accounts for tax/BAS and payroll (removes temptation).

If you’d like to discuss any of the above further, please don’t hesitate to contact our office.

Important note

General information for Australian small businesses.

This guide is general in nature and doesn’t consider your specific circumstances. Cashflow outcomes can vary based on industry, customer terms, funding arrangements, and tax obligations. If you’d like a tailored forecast or a cashflow clean-up plan, we can help.

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