A business can make a profit on paper and still struggle to pay bills on time. Cash flow is the timing gap between money coming in and money going out. If customer payments arrive after wages, rent, tax or supplier bills are due, the business can feel short of cash even when sales look healthy.

Look ahead, not just at the bank balance

A bank balance shows what is there today; a forecast helps you see what may be there in a few weeks. List expected customer receipts and known payments by date. Include regular costs such as wages, rent, loan repayments and tax, then update the forecast when invoices are paid or plans change. Our monthly cash flow forecast and spreadsheet can help you get started.

Shorten the time between work and payment

Send invoices as soon as the work is complete, make payment terms clear before starting, and follow up overdue invoices consistently. For larger jobs, consider whether staged claims or deposits are appropriate for the contract. A week between finishing work and sending the invoice is a week added to the wait for payment.

Plan for the costs that arrive later

Some costs do not arrive with each sale. Tax, super, insurance renewals, annual subscriptions and quieter trading periods can all create a squeeze if the money has already been spent elsewhere. Use your forecast to set aside amounts as income arrives and to identify weeks when spending needs attention.

Review the forecast regularly

Compare the forecast with what actually happened. If customers are paying later than expected, update the dates rather than treating the original estimate as money in the bank. If costs are rising or work is seasonal, use a cautious estimate and review it with someone who understands the business.

Tradies often have long gaps between buying materials, completing work and receiving payment. Our guide to managing cash flow through a slow season covers that situation in more detail.

If cash flow is hard to predict, current records and a regular forecast can show where the pressure is building. Talk to About Business Bookkeeping about keeping your accounts and cash flow information up to date.