Cash flow — not profit — is the number one reason Australian small businesses fail. A profitable business can still run out of cash if customers pay slowly, expenses are front-loaded, or seasonal dips aren't planned for.
Start with a 13-week cash flow forecast: list your expected cash inflows (customer payments, not invoiced amounts) and outflows (rent, wages, suppliers, tax, loan repayments) week by week. This gives you early warning of any shortfall so you can act before it becomes a crisis.
Tighten your invoicing cycle. Invoice on the day you complete the work, not at the end of the month. Set payment terms of 7-14 days for small jobs (the default 30-day terms that many businesses use are unnecessarily generous for most trades and services). Offer a small discount for early payment (e.g., 2% for payment within 7 days) and follow up overdue invoices immediately — most late payments are simply forgotten, not deliberate.
On the outflow side, negotiate longer payment terms with suppliers where possible. Time large purchases (equipment, stock) to align with your cash peaks rather than troughs. Build a cash reserve of at least 2-3 months of operating expenses to buffer seasonal dips and unexpected costs.