BUSINESS cashflow

A good cash flow forecast will help you to monitor when you have money coming in and going out of your business.

When it comes to managing business finances, having a good cash flow is fundamental to the survival of your business. As we head towards the new year, take some time to learn how to better manage your cash flow and enter 2026 with a cash flow plan to help you achieve your business goals, with these tips from the Small Business Development Corporation (SBDC).

Words Small Business Development Corporation

CASH flow is a term that is often used in business, but what does it really mean? In simple terms, it’s the money moving in and out of a business over a specific period — so the total cash your business receives from sources like sales, minus the total cash it pays for expenses like salaries, rent, and supplies. A business with positive cash flow has more money coming in than going out, while negative cash flow means it’s spending more than it’s earning.

Your cash flow may be the difference between your business’ success and failure — even if you are profitable, you may be forced to close your doors because you don’t have enough money at hand to pay your rent or electricity costs.

With properly planned cash flow, you can take your business in a positive direction and maintain enough working capital to operate through the quiet periods.

Here are 10 tips to help you manage your small business cash flow in 2026.

1. Forecast to miss the cash flow storms

A good cash flow forecast will help you to monitor when you have money coming in and going out of your business. It can help you identify when you have extra cash available or are likely to experience shortages and provide warning signs to avoid future financial problems. Having a strong grasp on the financial forecast of your business will help you map out money decisions throughout the year and not be surprised by shortages or surpluses in cash.

2. Know which levers to pull to manage cash in and cash out

If your cashflow identifies a need for more cash, there are several tweaks you can make in your business to bring more money in. To bring more money in, consider increasing your pricing, lifting your volume of sales and following up your debtors. To reduce the cash going out, review outgoing expenses such as subscriptions, inventory and staffing levels to determine whether you can make some savings. You may also consider refinancing your loans and selling any underutilised assets.

3. Increase your sales

Consider a marketing campaign or sales push to increase sales and grow your customer base, whether you are targeting consumers directly or other businesses. It’s important to note that putting effort into new marketing techniques doesn’t necessarily require a lot of money. For example, using the internet and social media to tell your audience about the benefits of your products or services, share positive reviews or even remind people about your trading hours can be a cost effective technique to advertise and promote your products.

4. Manage your debtors proactively

You should always invoice immediately once goods or services are delivered and ensure all contact and billing details are correct, with clearly defined terms and conditions. The sooner an invoice goes out, the sooner you can get paid. You can encourage early payment by offering a small discount and providing multiple, convenient payment options like credit card, EFTPOS or PayPal.

Send monthly statements so debtors can reconcile outstanding invoices and plan their payments, rather than relying on automated reminders which are easily ignored. Consider calling the debtor directly to build a good relationship, confirm the invoices are approved for payment and lock in a payment date. Make sure to review aged debtor reports regularly and actively follow up overdue accounts.

5. Tighten your terms of credit

Late payments can spell disaster for many small businesses. There are important measures business owners can put in place to avoid problems with late or non-payments of debts. Minimising exposure to debtors is good financial practice for any business, as well as having documented systems and processes to keep track of cash flow and control finances.

In Australia, payment terms are considered part of a sales contract and operate under contract law, therefore failure to comply with agreed payment terms is a breach of contract. If your business provides a product or service that requires substantial cash or effort before you can deliver, consider asking for a deposit or milestone payment.

Act promptly on overdue accounts by stopping credit or work until payment is received and consider escalating aged debts to a debt collector or Magistrates Court if necessary. You could also report the debt default to a credit report agency. Given your debtors could be a risk to your cash flow, it pays to do due diligence on potential customers and assess them before you start work. You should also consider withdrawing credit terms from customers who consistently pay late or operate outside your agreed terms.

6. Monitor stock levels

Good stock control can help make your cash flow better. Modify the quantity and timing of your stock purchases to coincide with higher cash flow periods. Do regular inventory reviews and hold only as much stock as you require to run your business efficiently — remember excess stock can tie up funds and increase storage and insurance costs.

7. Reduce your outgoings

Effective cash flow management also means keeping outgoing payments to a minimum. Look for opportunities to save money by streamlining business practices and reducing operating costs. Some ways you may be able to save include:

• minimising energy costs by installing energy efficient products or undertaking some business activities outside of peak electricity usage periods

• identifying areas where you can reduce wastage or improve production efficiencies

• reviewing your insurances, phone and internet service contracts when they become due for renewal to check you’re getting the best deal

• negotiating your lease with your landlord

• negotiating with suppliers for better buying opportunities

• regularly reviewing any subscriptions to make sure they are still needed

• targeting your advertising to your ideal customers to get the most out of your marketing spend.

8. Build a cash reserve

Having access to cash when you need it can make or break your business. Creating a cash reserve will give you the confidence and finances you need to grow your business and give you a buffer for any unexpected expenses. It also provides you with an opportunity to take advantage of strategic investments or any opportunities to reduce costs.

9. Use technology to help you

If you’re not confident with numbers, hire a professional accountant and use quality accounting software. This way, you’ll always know your cash position and it’ll help you to forecast your cash flow for planning purposes. Many business owners are moving towards cloud-based solutions to improve their productivity and efficiencies. These accounting systems can make it simpler for business owners to get real-time visibility of their cash and reduce the time it takes to proactively manage and forecast cash flow. Make the most of these tools, but be mindful that technology also comes with its risks, so consider implementing good cybersecurity practices like using strong passwords and multi-factor authentication.

10. Grow your financial skills and know how

Many business owners, particularly in the early stages of running a business, struggle to understand their business financials. Building your knowledge and business financial skills can help improve how you manage your cash flow and finances.

Consider attending a low cost financial skills workshop with the SBDC to improve your business knowledge and get advice from an experienced accountant or SBDC business adviser.