Understanding working capital to maintain business success

If cashflow keeps your business moving, working capital is the regular check you should undertake to ensure stability. It is important to understand your working capital position to maintain business success. Regularly checking working capital plays an essential part in protecting your business, particularly in periods of economic uncertainty, rising operating costs and shifting payment cycles.

What is working capital?

Working capital is your current assets minus your current liabilities. It measures the surplus or deficit you have available to meet short term commitments without needing to sell assets, borrow additional funds, or inject your own money into the business. The more working capital you have, the easier it is to fund growth, manage seasonal fluctuations and respond to unexpected expenses.

To calculate your working capital:

Cash + debtors + stock + work in progress minus creditors minus GST and PAYG owing minus superannuation payable

For example, if your business had the following balances:

Cash 150,000 Debtors 120,000 Stock 100,000 Creditors 45,000 Taxes owing 25,000

Then your working capital would be 300,000.

If the business had an overdraft of 150,000 rather than a positive cash balance, the working capital would fall significantly. This means the business would have little or no buffer to cover any slowdown in debtor payments or a downturn in sales. In more serious cases, the business could face risks associated with trading while insolvent.

Working capital pressure today is more commonly caused by rising supplier costs, wage increases, extended debtor terms and higher compliance obligations. Now is the time to review your processes, reporting and payment systems to strengthen your working capital position.

Consider the following strategies:

Build up enough cash to cover at least 2 months’ sales value

Use the average sales value for the last six months as a starting point, but also review your fixed monthly commitments including wages, superannuation, rent, loan repayments and subscriptions. Accurate monthly reporting ensures this calculation reflects your real cost base. First Class Accounts Ovens & Murray can help you determine the correct buffer amount based on reliable data.

Renegotiate your debt

If your business has an overdraft, consider whether the core debt should be structured as a term loan. Structured debt aligned to long term assets can reduce short term working capital pressure. Clear, up to date financial reporting strengthens conversations with lenders.

Negotiate with suppliers

Speak to your suppliers about payment terms that align with your cash inflows. Extended terms or structured payment arrangements may improve your working capital position. Consistent bookkeeping ensures these arrangements are tracked accurately.

Set aside money for taxes

Calculate the percentage of sales required to cover GST, PAYG and superannuation and transfer this regularly into a separate account. Automated systems can support this process when configured correctly. This protects your working capital and ensures compliance obligations are met on time.

Inject sufficient funds

If these strategies do not sufficiently improve your working capital, you may need to inject additional funds or secure structured finance. Decisions should be supported by cash flow forecasting and accurate reporting.

Working capital management

Undertaking regular working capital management is an effective way to strengthen your cash flow management. It should form part of your monthly review process rather than an occasional calculation.

First Class Accounts Ovens & Murray can help you calculate your working capital requirements, implement reliable systems and improve your reporting so you can make informed decisions with confidence.

Talk to us about strengthening your working capital management.

What is working capital?

Working capital is the difference between current assets and current liabilities. It shows whether a business can meet short term obligations.

How do you calculate working capital?

Working capital is calculated by subtracting current liabilities from current assets such as cash, debtors and stock.

Why is working capital management important?

Working capital management ensures wages, suppliers and tax obligations can be paid on time without creating cash flow pressure.

How often should working capital be reviewed?

Working capital should be reviewed monthly alongside regular financial reporting.

What causes working capital problems?

Delayed debtor payments, rising costs, high stock levels and poor reporting can all reduce working capital.

Managing cashflow

and accessing funding when you need it

Working capital is one of the most important parts of running a stable business. It is the liquid cash available to cover wages, supplier payments, tax obligations and everyday operating costs.

When working capital tightens, pressure builds quickly. Payroll dates do not move. BAS lodgements still fall due. Suppliers still expect payment.

The solution is rarely panic borrowing. It is structured cash flow management, accurate reporting, and knowing what funding options are available before the pressure becomes urgent.

At First Class Accounts Ovens & Murray, this is where we step in. We help business owners understand their cash position clearly, plan ahead, and access funding in a practical and informed way.

Helping you understand your cash requirements

The starting point of any funding decision is understanding exactly what your current cash requirements are. That means sitting down and reviewing your full financial position in detail.

We look at your current bank balances, outstanding invoices, upcoming supplier payments, payroll commitments, superannuation liabilities, and GST or PAYG obligations. We also review your short term forecasts so you can see what is due over the next one to three months.

With accurate, up to date bookkeeping and reconciled accounts, you can clearly see whether there is a genuine funding gap or simply a timing issue between money coming in and money going out.

Armed with this information, you can make a considered decision about how much funding is actually required, if any. Borrowing without this clarity often leads to taking on more debt than necessary.

Understanding your true cash requirements puts you back in control and reduces uncertainty.

Liaising with banks and lenders

We can support you in conversations with banks, lenders and alternative funding providers by ensuring your financial information is accurate and up to date.

You may need to discuss extending an overdraft facility, increasing a line of credit, restructuring repayments, or exploring short term working capital finance.

Having clear and current financial reports gives you a stronger position when having these discussions. Lenders in 2026 expect reliable bookkeeping and realistic cashflow forecasts. If your numbers are current and reconciled, the conversation becomes far more straightforward.

Preparing financial information for lenders

Any lender will require detailed and accurate financial reporting to support a funding application.

We prepare up to date accounts, cashflow statements and forward projections so banks and finance providers can clearly assess your financial position.

This includes reconciled balance sheets, profit and loss reports, aged debtor listings and evidence of compliance with BAS, payroll and superannuation obligations.

Accurate reporting not only supports approval, it can also influence the terms offered.

Accessing government assistance

There are government grants, industry incentives and state based support programs available to businesses in 2026.

Depending on your industry, size and location, you may be eligible for small business grants, wage subsidies, training incentives, energy efficiency programs or regional development support.

We can help you identify what may apply to your business and ensure your financial records are accurate and up to date before submitting any application.

Clear reporting and compliant bookkeeping improve your chances of approval and reduce delays in the process.

Improving your debtor tracking

Outstanding customer invoices are often one of the main causes of cashflow pressure.

We can help you review your aged receivables report and identify which invoices require immediate attention.

From there, you can prioritise follow ups, clarify payment terms and, where necessary, negotiate realistic repayment arrangements.

Clear and consistent debtor management reduces reliance on external funding and improves working capital over time.

Extending credit from suppliers

Open and honest communication with suppliers remains important when managing short term cashflow pressure.

Where appropriate, you may be able to negotiate extended payment terms, part payments or structured repayment arrangements.

Having clear cashflow forecasts allows you to approach these conversations with confidence and provide realistic timeframes, rather than uncertain promises.

Maintaining control and stability

Cashflow pressure can happen at any stage of business growth. The key is identifying issues early and responding with clear information and practical action.

If you would like to strengthen your cashflow management, understand your working capital position or explore appropriate funding options, First Class Accounts Ovens & Murray can provide practical support.

We help you review your numbers, prepare accurate reports and make informed decisions so your business remains stable and well managed.

Talk to First Class Accounts Ovens & Murray about getting on top of your cashflow.

FAQs about working capital and managing cashflow

What is cash flow management?

Cash flow management is tracking, forecasting and controlling the money coming into and leaving your business to ensure you can meet short-term obligations.

How do I improve cash flow in my business?

Improve invoicing speed, follow up overdue accounts, review payment terms, forecast upcoming expenses and maintain accurate bookkeeping.

When should a business apply for funding?

Funding should be considered when cash flow forecasts show a shortfall that cannot be managed through improved collections or expense adjustments.

What documents do lenders require for business funding?

Lenders typically require up-to-date profit and loss reports, balance sheets, cash flow forecasts, aged receivables reports and compliance history.

Can better bookkeeping reduce the need for funding?

Yes. Accurate bookkeeping and forecasting often identify timing gaps that can be resolved internally without external borrowing.

Finding balance in business without burning out

Work life balance is talked about constantly, yet many business owners feel further away from it than ever. When you are managing staff, cash flow, systems, compliance, and customer expectations, balance can feel unrealistic.

For many established businesses, the issue is not a lack of effort. It is that too much sits with the owner, and too many decisions rely on them being available at all times. This is where structure, systems, and reliable support start to matter.

This article looks at practical ways to create balance that actually works in a real business environment, not quick fixes or lifestyle tips that ignore commercial reality.

Prioritise what actually needs your attention

In many businesses, everything feels urgent. That is usually a sign that priorities are unclear, not that everything genuinely requires immediate attention.

Start by separating work that only you can do from work that simply needs to be done. Strategy, key decisions, and leadership often sit with the owner. Day to day administration, data processing, and routine tasks do not.

Using task and project management tools can help, but only if they reflect how your business actually runs. For some businesses, simple task lists work. For others, job based or workflow tools are more effective. The goal is not more technology, but clearer visibility of what matters most and what can wait.

When priorities are clearer, pressure reduces. You stop reacting constantly and start working with intent.

Delegate and remove single points of pressure

Delegation is not about losing control. It is about removing bottlenecks.

When one person holds all the knowledge or approvals, work slows down and stress increases. This applies just as much to bookkeeping, payroll, and compliance as it does to operations.

Many business owners delay delegating financial tasks because they worry about accuracy or compliance. In reality, keeping these tasks in house without the right expertise often increases risk. Errors in payroll, super, or reporting usually cost more time and money to fix later.

Engaging a reliable bookkeeping partner means key tasks are handled accurately and consistently, without relying on one internal person being available. It also creates breathing space for you, as the owner, to focus on running your business rather than chasing paperwork.

Protect time by planning for it properly

Time off rarely happens by accident. If it is not planned, work will always fill the space.

This includes time away from the business, but also time to review numbers, plan cash flow, and check that systems are working as they should. When business owners only look at financial data under pressure, stress increases and decision making suffers.

Regular reporting, scheduled payroll, and clear payment planning reduce the mental load. When you know staff, suppliers, and the ATO are covered, it becomes easier to step away without worrying about what might go wrong.

Use technology that genuinely reduces work

Technology should reduce effort, not add complexity.

In 2026, most businesses are using cloud accounting software, but many are not using it well. Manual work still exists because systems are not set up correctly or apps are not integrated properly.

Choosing the right tools for your industry and workflow makes a significant difference. Automated bank feeds, payroll systems, and document capture tools reduce data entry and errors. When information flows correctly between systems, reporting becomes more reliable and decisions easier.

First Class Accounts Ovens & Murray supports businesses by recommending and implementing apps that actually suit how they operate. The focus is always on accuracy, efficiency, and clarity, not technology for its own sake.

Use trusted support, not just peer advice

Peer support is valuable, but it should not replace professional advice.

Talking with other business owners can provide perspective, but every business has different cash flow pressures, staffing structures, and compliance obligations. What works for one business may not suit another.

Having a bookkeeper who understands your business, works alongside your accountant, and provides clear explanations gives you reliable input when decisions need to be made. This removes guesswork and reduces reliance on informal advice.

Build a business that supports your life

Enjoying your work is important, but enjoyment often disappears when pressure builds and systems fail.

Balance comes from knowing the foundations are solid. Payroll is processed correctly. Cash flow is visible. Compliance is handled. Systems support the business rather than slowing it down.

If you want to create more balance without risking accuracy or control, First Class Accounts Ovens & Murray can help. Through reliable bookkeeping, payroll support, and practical app advice, we remove the load that sits quietly in the background of many businesses.

Get in touch to talk about how better systems and support could free up time and reduce stress in your business.

How can bookkeeping help with work life balance?

Reliable bookkeeping improves cash flow visibility, reduces compliance stress, and removes routine tasks from the owner.

Does outsourcing payroll reduce stress?

Yes. Outsourcing payroll ensures staff are paid correctly and on time, reducing risk and mental load for business owners.

Can business apps really save time?

When chosen and set up correctly, business apps reduce manual work and errors, freeing up time for more important tasks.

When should a business owner get bookkeeping support?

When accuracy, cash flow clarity, and time pressure start affecting decision making, it is time to seek support.

How healthy is your working capital?

We all know that cash is king when it comes to business success, but what exactly is ‘working capital’ and how does this financial metric help measure the health of your business?

Working capital is made up of the cash and assets that are available in the business to fund your operations and keep you trading. It is worked out by taking your current assets (the things you own) away from your current liabilities (the things you owe to other people).

If your working capital is strong, you have enough on hand to pay your team, your suppliers and the ATO on time and still have room to move. If it is weak, even a small bump in expenses or a delay in customer payments can cause stress.

In 2025, with increasing costs and tighter margins for many Australian businesses, keeping an eye on working capital is more important than ever. First Class Accounts Ovens and Murray helps by keeping your bookkeeping up to date, so you always have a clear picture of your numbers instead of guessing.

Why working capital matters

So, why is working capital such a critical metric?

Having the liquid capital needed to trade It’s possible for your business to be busy, successful and profitable, but for your cash position to still be in poor health and that can have a serious impact.

If you can’t readily convert your assets into liquid cash, it’s a struggle to meet your cashflow goals, pay your bills and fund your day to day operations. But with the optimum level of working capital, you strengthen your balance sheet and put the company in a solid financial position.

Healthy working capital gives you breathing space. You can pay people on time, take up good opportunities when they arise and sleep better knowing what is coming in and what is going out.

This is where cash flow confidence becomes practical. When First Class Accounts Ovens and Murray is managing your day to day bookkeeping and people payments, you can see your true position more clearly and make decisions based on real numbers, not gut feel.

How to achieve a healthy level of working capital

To achieve a healthy level of working capital you will need to:

Proactively manage your cashflow

Cashflow feeds your working capital by pumping liquid cash into the company and keeping the balance between assets and liabilities in a strong position. But to achieve this, it’s vital to achieve a positive cashflow position, where your cash inflows are greater than your cash outflows. This means getting paid on time, lowering your outgoings and keeping a close eye on your ongoing cash position.

In real terms, this might look like tightening up your debtor follow up, reviewing your payment terms, spreading larger bills over a realistic period and planning for regular commitments such as wages, super and GST so they do not come as a surprise.

First Class Accounts Ovens and Murray can help you put simple, practical systems in place to support this. That might include regular cashflow reports, payment scheduling, and clearer visibility of who you need to pay and when. The aim is to make your cashflow more predictable, which improves your working capital and reduces stress.

Monitor and forecast your financial position

Running regular financial reports helps you stay in control of your finances. With careful monitoring and forecasting of your cash position, you can ensure you don’t end up in a negative cashflow position, without the requisite working capital to trade and fund the next stage in your business plan. 

Cloud accounting software and business intelligence apps have made it easier than ever to create up to date, real time reports and run dashboards that show your key metrics.

In 2025, there is a wide range of connected apps that integrate with platforms such as Xero to give you clearer insights. These tools can help you track cashflow, see upcoming payroll, GST and PAYG obligations, and spot trends before they turn into problems.

First Class Accounts Ovens and Murray offers business app advisory to help you choose and set up the right tools for your business. We then use those tools to give you regular, easy to understand reports and forecasts, so you know how healthy your working capital is and what is coming up over the next few weeks and months.

Use additional finance when required

If working capital is looking thin on the ground, then additional funding may be needed to bolster your balance sheet. Short term finance options, such as overdraft extensions or invoice finance, and longer term business loans can be needed to keep working capital on an equilibrium.

Before taking on any extra finance, it is important to understand why your working capital is under pressure and whether it is a temporary issue or an ongoing pattern. That way you can choose the most suitable type of funding and avoid simply masking a deeper problem with more debt.

By keeping your books current and providing clear reports, First Class Accounts Ovens and Murray can help you and your accountant or finance provider see the full picture. This makes it easier to have informed conversations about what kind of funding, if any, is appropriate for your situation.

Support to keep your working capital healthy

Working closely with your accountant and bookkeeping team is vital if you want to promote the ideal level of working capital in the business. Together, they can help manage your cashflow, monitor your financial metrics and support you to access additional finance and funding when your capital needs a boost.

First Class Accounts Ovens and Murray focuses on reliable, done for you bookkeeping, cashflow confidence and real world advice. We become part of your team, keeping your numbers accurate and your reports clear, so you can make better decisions about working capital.

If you would like to understand how healthy your working capital really is, and what you can do to improve it, talk to First Class Accounts Ovens and Murray about reviewing your current position and setting up better support around your cashflow.

What is working capital in a business?

Working capital is the difference between your current assets and current liabilities. It shows whether you have enough available resources to pay your short term commitments.

How does working capital affect cashflow

Working capital affects how easily you can pay suppliers, wages and tax on time. Strong working capital supports smoother cashflow and reduces day to day financial pressure.

How can I improve my working capital

You can improve working capital by tightening debtor collection, managing expenses, planning for regular commitments, using helpful apps and keeping your bookkeeping up to date.

Do I need extra finance to fix working capital problems

Sometimes extra finance is useful, but it should be based on clear reports and an understanding of why your working capital is under pressure, not used to cover ongoing problems.

How can First Class Accounts Ovens and Murray help with working capital

First Class Accounts Ovens and Murray keeps your books accurate, helps you monitor cashflow and working capital, and provides real world advice so you can make better decisions.

How to Measure Business Performance

Running a business means juggling a lot of moving parts. You’re focused on customers, staff, suppliers, and the daily to-do list. But if you’re not keeping an eye on the right numbers, it’s hard to know whether all that effort is actually paying off.

Knowing which numbers really matter, your critical numbers, helps you see what’s working, what needs attention, and where to focus your time. They’re the indicators that show whether your business is healthy, sustainable, and heading in the right direction.

At First Class Accounts Ovens & Murray, we help business owners make sense of their numbers. Because when you understand what to measure, you can make decisions that improve performance, strengthen cash flow, and take the stress out of running your business.

Why knowing your numbers matters

It goes without saying that business success needs to be measured. But it’s equally important to know what to measure. The numbers that matter most, often called your critical numbers, act as the levers that directly influence performance and outcomes.

Focus on four or five key metrics that provide genuine insight into your business health. 

These vary depending on your industry and goals, but most businesses should know their minimum viable sales figure per day or week to maintain operations. 

Understanding your gross margin (the percentage of sales revenue that remains after deducting direct costs) is also essential. It helps ensure you’re covering overheads, meeting personal income needs, and sustaining profitability.

In 2025, many businesses are also tracking non-financial performance indicators alongside their financial data. For example, customer satisfaction scores, staff retention rates, and workflow efficiency can all help identify where improvements will make the biggest difference to your results.

Choosing the right critical numbers for your business

Some examples of tailored critical numbers include:

• Return on investment (ROI) by team member: understanding how each employee contributes to overall business outcomes.

• Average value of proposals or quotes won: helps you refine your pricing strategy and identify where higher-value opportunities exist.

• Number of new client enquiries, networking calls, or meetings: provides insight into how well your business development efforts are performing.

• Average debtor days (the time it takes customers to pay): a critical indicator of cash flow health. If payments are delayed, it can quickly impact your ability to pay suppliers, employees, or the ATO.

At First Class Accounts Ovens & Murray, we often help clients set up real-time debtor tracking and cash flow forecasting tools using Xero and add-on apps like Calxa or Dext, so they can see exactly where delays are happening and take action early.

How to measure your numbers accurately

Once you’ve identified your key numbers, the next step is to determine how you’ll measure them. 

Real-time, cloud-based data has become the standard for smart business management in 2025. With the right software, you can access accurate, up-to-date information anytime, no more waiting for end-of-month reports to know how your business is performing.

Setting up your reporting structure properly from the start makes all the difference. You may need to adjust your chart of accounts, change how income or expenses are coded, or introduce tracking categories to separate revenue by product, service type, or location. These small adjustments create visibility and clarity, allowing you to make better-informed decisions.

Tools like Xero, ApprovalMax, and Calxa can automate much of this process, providing dashboards and reports that highlight performance in real time. 

At First Class Accounts Ovens & Murray, we can help you select, set up, and manage the right systems to suit your business so you always know exactly where you stand.

Turning measurement into improvement

As management expert James Harrington said, “Measurement is the first step that leads to control and eventually to improvement.” When you track the right metrics, you gain control over your business, identify potential risks early, and set the foundation for long-term improvement.

Reliable bookkeeping and accurate reporting give you peace of mind that your business is running as it should. When you understand your numbers, you can move from reacting to problems to proactively managing growth.

Understanding your numbers

If you’re unsure what to measure or how to track it effectively, First Class Accounts Ovens & Murray can help. From setting up cloud-based bookkeeping systems to creating customised management reports, we’ll make sure your critical numbers are clear, accurate, and always available when you need them.

Get in touch today to discover how we can help you take control of your business performance and build lasting confidence in your numbers.

Common questions business owners ask about measuring performance

What are critical numbers in business?

Critical numbers are the key metrics that have the greatest impact on your business performance. They help track financial health, efficiency, and growth.

How often should I review my business metrics?

Ideally, review them weekly or monthly using real-time reports from your bookkeeping or accounting software.

What software can help me track my business performance?

Tools like Xero, Calxa, Dext, and ApprovalMax can automate reporting and provide real-time visibility of your key business numbers.

Can a bookkeeper help me identify my critical numbers?

Yes. At First Class Accounts Ovens & Murray, we help you pinpoint, measure, and understand the numbers that matter most so you can make confident business decisions.

4 Tips to help your debtor management in 2025

Asking customers for payment isn’t always easy, but keeping money flowing into your business is essential. Without consistent cash flow, it becomes harder to pay wages, suppliers, or tax obligations on time.

When it comes to collecting what’s owed, communication, empathy, and smart systems go a long way. Managing your debtors well doesn’t just protect your bank balance, it helps maintain strong relationships and keeps your business steady.

Here are four simple ways to improve debtor management in 2025.

1. Communicate Early and Personally

Good communication is one of the most effective debtor management tools you have. Try to connect personally rather than relying on a generic email or automated message.

A friendly phone call or a short, personalised email to check if an invoice has been received can make a big difference. It shows you care about your customer and gives them a chance to raise any issues early.

Be proactive rather than reactive. Following up before payments are overdue helps you stay in control of your cash flow and avoids last-minute surprises.

If you’re unsure when to follow up, set clear payment terms on your invoices and send polite reminders a few days before the due date. Consistent communication shows professionalism and keeps payments front of mind.

If you find debtor management stressful or time-consuming, First Class Accounts Ovens & Murray can support you with simple systems that help you stay on top of cash flow and payments.

2. Add Value to Your Customer Relationships

Adding value to your customer relationships helps build trust and encourages timely payments. Think about how you can make it easier or more worthwhile for customers to pay you.

This might mean including a thank-you note with your invoice, sharing a quick update about your products or services, or offering a small loyalty reward for clients who always pay on time.

Small gestures go a long way. They show that you value your customers and appreciate their business. The more positive your relationship, the more likely clients are to prioritise your payment.

And if managing debtor relationships is taking up too much of your time, First Class Accounts Ovens & Murray can help you put the right systems in place to keep things running smoothly.

3. Offer Flexible Payment Options

The easier you make it for customers to pay you, the faster you’ll get paid.

If some clients are struggling with cash flow, consider breaking larger invoices into smaller instalments or extending the payment period slightly. You could also offer payment options such as bank transfer, BPAY, or credit card to suit their preferences.

Some businesses also find success offering a small discount for early payment, even 2–5% can be enough to encourage faster turnaround.

Being flexible doesn’t mean being taken advantage of. It’s about finding solutions that work for both sides while maintaining a consistent flow of income.

If you’re unsure what flexibility looks like for your business, First Class Accounts Ovens & Murray can help you review your payment terms and make sure they align with your cash flow needs.

4. Use Tools to Streamline Debtor Management

You don’t need to chase every invoice manually. There are affordable tools that automate reminders, track overdue accounts, and keep your records organised.

If you’re using cloud accounting software like Xero, you can set up automatic payment reminders or generate reports showing who owes what and when.

There are also simple add-ons that can help with cash flow forecasting and debtor tracking, giving you a clear picture of what’s coming in and going out each month.

Using technology doesn’t replace personal communication, but it can save hours of admin time and help prevent invoices slipping through the cracks.

If you’d like to explore how to make your debtor management more efficient, First Class Accounts Ovens & Murray can show you easy ways to automate reminders and track payments, without losing the personal touch.

Keep the Cash Flow Moving

Managing debtors well is part of running a healthy business. The more proactive you are with communication, the more predictable your cash flow becomes.

Even small changes, like setting clear terms, sending early reminders, and maintaining good relationships, can make a big difference to how quickly you get paid.

If you’re ready to improve how your business handles debtors and protect your cash flow, contact First Class Accounts Ovens & Murray today. We’ll help you put systems in place that save time, reduce stress, and keep your money moving.

Get Paid Faster: Your Debtor Management Questions Answered

How can I improve my debtor management quickly?

Start by reviewing outstanding invoices weekly, following up before payments are overdue, and using polite reminders.

What’s the best way to handle overdue accounts?

Stay calm and professional. Reach out early, understand the reason for delay, and agree on a payment plan that works for both parties.

What’s the most common debtor management mistake?

Waiting too long to follow up. Early and consistent communication makes a huge difference in getting paid faster.

Can a bookkeeper help improve my debtor management?

Yes. First Class Accounts Ovens & Murray can help set up systems that keep your debtor process simple, organised, and consistent.

Talk to us about ways to improve your debtor management.

How to create a cash flow forecast for your business

A cash flow forecast is one of the most important tools you can use for business planning. In 2025, with rising costs and tighter compliance deadlines, understanding exactly what cash is coming in and going out of your business is essential.

A forecast gives you a clear picture of how long your business can continue to operate at current sales levels by showing how much money you’ll have in the bank at the end of a given period. It’s not just about survival — it’s about building confidence in your numbers so you can make informed decisions about growth, payroll, tax obligations, and investment.

At First Class Accounts Ovens & Murray, we help business owners build reliable forecasts that take the stress out of cash flow management.

Why a cash flow forecast matters

A cash flow forecast gives you a clearer understanding of what’s driving revenue in your business and visibility over your expenses. With this knowledge, you can identify which costs are essential, which are flexible, and where you can make changes to improve your position.

Forecasting also allows you to model different scenarios, helping you see the outcomes of decisions before you make them. For example:

• What happens if sales dip for three months?

• How would expanding into a new channel impact your outgoings?

• Can you afford to bring on another employee, and when?

In 2025, lenders, investors, and government support programs increasingly expect to see detailed cash flow forecasts as part of their approval process. A strong plan demonstrates that you understand your numbers and have a strategy to deal with uncertainty.

If you’re applying for funding or looking to expand, First Class Accounts Ovens & Murray can help you prepare accurate forecasts that meet lender requirements.

What information do you need?

The accuracy of your cash flow forecast depends on the quality of the data you put in. While accounting software like Xero, MYOB or QuickBooks can automate parts of the process, you still need to ensure your records are up to date and accurate.

Here’s the key information to gather before you start building a forecast:

Understanding where your cash is coming from

Start with revenue from sales. Break your figures down by product or service line and across sales channels. This helps you identify your biggest income drivers. Ask yourself questions like:

• Does 80% of your revenue come from just 20% of your products or services?

• Which sales channels are the most profitable?

• Do you have a healthy balance of high-value/low-volume and low-value/high-volume sales?

Don’t forget to include other sources of income, such as government grants, tax refunds, or business investments. In 2025, many businesses are also earning income through digital platforms or subscription models. It’s important to make sure these are captured as well.

Understanding expenses, ie where is the cash going?

Your forecast should also capture all outgoing costs, such as rent, wages, supplier payments, bank fees and loan repayments, tax liabilities, utilities, and insurance. If you have a business loan, note down the repayment schedule, interest, and when the debt will be cleared.

It’s also important to include:

• Tax obligations (GST, PAYG, superannuation, company tax)

• Capital expenses (equipment, vehicles, or major purchases)

• Variable costs such as freight, raw materials, or commissions

Separating fixed and variable costs will help you understand which expenses can be adjusted if your income changes. For example, rent is fixed, but travel, marketing spend, or director’s drawings can usually be reduced if needed.

First Class Accounts Ovens & Murray can help you set up a clear expense structure so you always know what’s fixed, what’s flexible, and how to plan for tax payments on time.

Making informed decisions in your business

A reliable cash flow forecast brings all of your financial data together in one place. It shows you not only how long your business can continue at current income levels, but also gives you the confidence to make big decisions. For example, it can help you determine when to:

• Hire additional staff

• Purchase inventory or equipment

• Take advantage of a supplier discount

• Invest in marketing or expansion

Remember, a cash flow forecast is different to a budget. A budget projects income and expenses, but a forecast focuses on the timing of cash movements. For example, you may record a sale in your budget, but if the customer pays on 30-day terms, the cash may not hit your bank account until the following month.

Building confidence with cash flow

If cash flow forecasting feels overwhelming, you don’t have to manage it alone. With the right setup, you can use your accounting software alongside forecasting tools to get accurate, real-time insights.

At First Class Accounts Ovens & Murray, we work with you to create forecasts that not only show where your business stands today, but also help you plan ahead for payroll, tax, supplier payments, and growth opportunities.

Contact us today to start building a cash flow forecast that gives you clarity and confidence in your business decisions.

Forecasting FAQs

Q: What is the main purpose of a cash flow forecast?

A cash flow forecast helps you predict the money coming in and going out of your business so you can plan for expenses, payroll, and growth.

Q: How often should I update my cash flow forecast?

It’s best to update your forecast monthly. Regular updates ensure you capture seasonal income dips, upcoming tax payments, and changes in expenses.

Q: What’s the difference between a budget and a cash flow forecast?

A budget estimates income and expenses, while a cash flow forecast focuses on when money will move in and out of your bank account.

Contact us today to start building a cash flow forecast that gives you clarity and confidence in your business decisions.

Should I focus on profits or cash flow in 2025?

Turning a profit is an essential part of running any successful business. But in today’s economy, where costs are rising and margins are under pressure, focusing only on profits can be risky. 

Without reliable cash flow, even profitable businesses can quickly run into trouble. 

The real answer is balance: you need both healthy profits and steady, predictable cash flow if you want to build a stable, long-term business.

Why cash flow matters

Cash flow is the foundation that keeps your business moving. Without a consistent and predictable flow of money into the business, you can’t cover overheads, pay employees, meet supplier invoices, or manage ATO obligations such as GST, PAYG and super. 

For many business owners, cash flow is what keeps them awake at night because when cash is tight, stability is at risk.

What’s needed in 2025 is a strong focus on cash flow management alongside strategies to drive profitability. 

This combination ensures you have enough cash in the bank to meet commitments today, while still building long-term profit for growth.

Financial management challenges

Keeping on top of your finances isn’t easy, especially with the ongoing pressures of 2025. 

Compliance requirements continue to evolve, payroll accuracy matters more than ever, and operating costs still need close attention. 

Many small business owners also find the technical language of accounting confusing, which makes it harder to track performance and plan ahead. This is where expert bookkeeping support from First Class Accounts Ovens & Murray becomes invaluable.

Understanding your finances

If you want to stay in control of your financial future, you need to understand how cash flow management works. In 2025, many industries are still feeling the effects of inflation and supply chain challenges, and consumer spending remains cautious. These pressures make cash flow forecasting and planning more important than ever. Having clarity around what’s coming in, what’s going out, and when it happens gives you the confidence to make smarter business decisions.

Key things to understand about your finances

Profit is a by-product of a sustainable business

Every business owner wants to see profits, but profitability alone doesn’t guarantee long-term success. 

A company can look profitable on paper, yet still struggle to pay staff or suppliers on time. What really matters is sustainability: consistent revenues backed by a clear view of your cash position.

Cash flow keeps your business running

Revenue is important, but without cash available to cover wages, rent, superannuation and ATO payments, your business can’t function. This is why business owners are often told “cash is king”. Because it determines whether you can continue trading day-to-day. 

At First Class Accounts Ovens & Murray, we work with business owners to manage inflows and outflows so they always know where they stand.

Know your costs and overheads

The other side of cash flow is managing expenses. 

In an ideal world, inflows exceed outflows. In practice, costs creep. 

Regularly review your cost base, overheads and supplier arrangements. Use the right tools to get real-time visibility. For example, Xero connects bank feeds and provides dashboards that make it easier to spot trends early. 

Add-ons like Dext (data capture), ApprovalMax (approvals) and Calxa (reporting and cash flow forecasting) can further strengthen your processes and insights.

Actively manage your spending

Small changes can make a big difference. 

Negotiating better supplier terms, switching to more efficient business apps, or automating manual processes can all ease pressure on your cash flow. 

First Class Accounts Ovens & Murray are business app specialists helping you identify and implement the right tools for your business, saving you time and money.

Look for sensible ways to increase revenue

Boosting revenue is another lever to improve cash flow. 

This might mean running targeted sales campaigns, expanding your service offering, or improving pricing strategies. When paired with reliable bookkeeping and clear reporting, you’ll be able to see exactly how increased revenue translates into improved cash flow.

Keep cash flowing, and profits will follow

With strong cash flow, your business rests on solid financial foundations. You’ll have the resources to pay staff, meet obligations, and reinvest in growth. This stability makes profitability easier to achieve and sustain.

How First Class Accounts Ovens & Murray helps

Whether you’re starting out or have been in business for years, First Class Accounts Ovens & Murray can help you strengthen your cash flow position. 

We focus on five areas that keep your finances practical and on track:

• Cash flow confidence: Forecasts, calendars and simple dashboards so you know what’s due and when.

• Payroll, super and people payments: Accurate, compliant payroll with Single Touch Payroll, leave, entitlements and super handled correctly.

• Business app advisory and implementation: Selecting, integrating and training on tools like Xero, MYOB, QuickBooks, Dext, ApprovalMax and Calxa to streamline your processes.

• Reliable, done-for-you bookkeeping: BAS, IAS and ATO lodgements, bank reconciliations, end-of-month reporting, and catch-up work completed on time, every time.

• Real-world advice: Clear explanations of your numbers so you can make informed decisions with confidence.

It often only takes a few small changes to make a big impact. Get in touch with us today to discuss how we can help you achieve consistent cash flow and lasting profitability.

Profits or Cash flow FAQs

What’s more important: profit or cash flow?

You need both. Profit measures performance over time. Cash flow confirms you can pay bills, wages and tax on time.

Why can a profitable business still run out of money?

Profit can be tied up in debtors or stock. If cash doesn’t arrive when expenses are due, you can still face shortfalls.

How do I improve cash flow quickly?

Tighten debtor follow-up, review payment terms, schedule ATO commitments, and check subscriptions. A short forecast helps prioritise actions.

What tools help with cash flow?

Xero, and other accounting platforms, offer real-time views. Add-ons like Dext, ApprovalMax and Calxa improve accuracy, control and forecasting.

Can a bookkeeper manage payroll and ATO lodgements?

A registered BAS Agent can handle BAS, IAS and payroll obligations. First Class Accounts Ovens & Murray provides this service.