Business Basis: Cashflow Management

28 September 2021

For small-to-medium businesses in particular, cashflow is one of the most important elements of business financial health. In fact, inadequate cashflow is one of the major causes of business failure.


So, what is cashflow? And how can you calculate, plan and manage it to your business’ financial advantage?


Cashflow measures the net amount of money going in and out of a business over a set period of time. It also shows the financial health of a business by helping you to understand your ‘liquid cash’ position and helps you predict how much cash you can expect to have available at any given point when used for forecasting.


Managing your cashflow is essential for planning ahead. You’ll be in a much stronger financial position if you understand how much cash you need, where it’s coming from and how long it takes to get it. 


Here are some steps to help you with your cashflow management:


1.Understand Your Working Capital Requirements 

Understand the amount of working capital your business needs to keep running. You’ll want to consider how much inventory you need to hold, what payments are due and when, and the length of time it takes to cycle from cash out to suppliers to cash in from customers.


2. Establish Your Working Capital Needs and a Buffer 

Make sure your business has enough cash in the bank to meet your working capital needs. You’ll also want to ensure you have a buffer – either business savings, personal funds, overdraft or a revolving credit facility to fall back on in the event of a rainy day.


3. Plan Ahead 

The unexpected will always happen, and it’s never a good thing to find out that you can’t survive when it does. Plan ahead by preparing cashflow forecasts for the upcoming year as well as a month-by-month basis.


4. Review Your Systems 

Review your systems to ensure that you’re invoicing your customers regularly, and that you’re consistently updating how much is owed to you and how much you owe. Always review incoming invoices as well to ensure charges are accurate.


Your accounting invoicing software keeps track of outstanding payments and sends automatic reminders when invoices are overdue. Income is updated automatically when paid, so you always know where you stand. 


5. Speed Up Your Cash Conversion Cycle

A cash conversion cycle measures the time span between disbursing and collecting cash. You can speed up this timeframe by asking for a deposit, putting customers on retainer or requesting monthly payment. You could also cut back your inventory levels or negotiate shorter delivery cycles or longer payment terms with your suppliers.


6. Make it Easy for Customers to Pay You

Always give your bank account details on your invoices, accept EFTPOS and credit cards, and set up a PayPal account. The easier you are to pay, the quicker you can receive funds and the better your cashflow position will be.

Tips for Moving Day

17 April 2025
It's that time again and Moving Day is upon. Moving Day' is a big day in the farming industry. To help you with a smooth transition here are some tips: Early preparation Make sure sharemilker or contract milker contracts are signed. Plan a farm inspection with relevant parties (farm owner, incoming and outgoing sharemilkers, farm manager, advisor). Recruit and finalise employment agreements for new farm staff. Communicate plans and dates with everyone involved. Contact your insurer and utility providers. Farm owner responsibilities Make sure employees leave the houses clean and tidy. Carry out house inspections for maintenance. Comply with healthy home standards. Confirm departure and arrival times with tenants. Consider drug testing, if needed. Animal movements and biosecurity Plan animal movements carefully. Clean and disinfect farm equipment and machinery. Minimise the risk of introducing exotic pests. About 5,000 farmers do this every year. Talking clearly and planning well makes this important farming tradition go smoothly.

Selling Your Business: What’s Next After You Exit?

11 April 2025
Selling your business is a huge milestone—one that marks the culmination of years of hard work, dedication, and vision. But once the deal is done and the dust settles, you may find yourself wondering, “What’s next?” Exiting your business opens up a world of possibilities. Here are five potential pathways to consider as you embark on this new chapter of your life. 1. Enjoy Retirement For many, selling a business is the gateway to retirement. After years of being immersed in the day-to-day demands of running a company, retirement offers the opportunity to slow down and enjoy life at your own pace. Whether it’s traveling, spending time with family, or taking up new hobbies, retirement allows you to focus on the things that bring you joy. Planning ahead—both financially and emotionally—will ensure you make the most of this well-earned time. 2. Invest in Other Businesses Selling your business doesn’t mean stepping away from the business world entirely. Many people choose to invest in other businesses, whether it’s through buying equity, becoming a silent partner, or supporting start-ups. Your years of experience give you a unique perspective, and investing allows you to stay connected to the business community while diversifying your income streams. 3. Start a New Venture Once an entrepreneur, always an entrepreneur! If you have a new idea or are passionate about exploring a different industry, selling your business can provide the resources and freedom to start fresh. Whether it’s launching a tech start-up, opening a café, or pursuing an entirely new market, starting a new venture keeps your entrepreneurial spirit alive. 4. Become a Non-Executive Director Another pathway is to leverage your expertise and become a non-executive director. Many businesses value the insight and guidance of experienced business people. As a non-executive director, you can provide strategic advice, mentor leadership teams, and help shape the future of other companies—all without the full-time commitment of running a business. 5. Pursue Philanthropy For some, selling a business is an opportunity to give back. You might choose to support causes you care about through charitable donations, creating a foundation, or volunteering your time. Philanthropy not only helps make a difference in your community or the wider world but can also provide a deep sense of fulfilment and purpose in your post-business life. Charting Your New Path Exiting your business is both an ending and a beginning. It’s a chance to reflect on everything you’ve achieved and to embrace new opportunities that align with your goals and passions. Whether you’re ready to relax and retire, dive into new ventures, or make a positive impact through philanthropy, the choice is yours. Whatever path you choose, careful planning will help ensure your next chapter is as rewarding and successful as the one you’ve just completed. If you’d like support in exploring your options or preparing for life after your business, don’t hesitate to reach out us for guidance.

How to Protect Your Business from 2025's Cyber Threats

7 April 2025
Cybercriminals are constantly finding new ways to trick businesses, and their scams are harder than ever to spot. Small businesses are especially at risk, often seen as easy targets due to limited resources or weaker security. But with the right precautions, you can protect your business and prove the scammers wrong. Be Aware of New Threats Staying informed is your best defence. Here are some of the latest cyber threats: AI-Powered Scams : Scammers now use artificial intelligence to create convincing phishing emails and fake websites that are difficult to distinguish from the real thing. Impersonation Attacks : Posing as banks, government agencies, or suppliers, attackers aim to trick you into sharing sensitive information. Deepfake Technology : Fake audio and video messages that mimic trusted sources are becoming more sophisticated and harder to detect. Train Your Team Educating your team is crucial. Teach them to: Spot warning signs, like urgent requests to act quickly. Double-check email addresses and URLs before clicking on links. Be cautious with unusual requests, even if they seem legitimate. Regular training sessions and phishing simulations can help your staff stay alert and recognise scams before they cause harm. Protect Your Business Basic but effective security measures can go a long way. For example: Enable two-factor authentication to secure your accounts. Keep your software and systems up to date. Use resources like the Business Online Security Series for practical cybersecurity tips. It's also wise to consult with your IT provider to evaluate your business’s vulnerabilities and develop a cybersecurity training plan for your team. Taking action now can save your business from potential threats while safeguarding your reputation. Stay informed, train your team, and strengthen your defences!
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