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.

Make your business more profitable

Is making your business more profitable at the top of your business goals this year?

Achieving significant profit is not an overnight feat. It requires a steadfast commitment, a clear focus, and a meticulously crafted strategy aimed at enhancing profitability.

This entails a comprehensive review of your business model and an examination of every operational area to identify opportunities to reduce costs, increase margins, and ultimately maximise revenue.

Understanding Profitability

Profitability is the ability of a business to earn a profit.

A profit results when the total income generated by the business exceeds the total expenses incurred. However, simply generating revenue is not enough; effective management of costs and strategic pricing are crucial to realising a substantial profit.

Strategic Review of Your Business Model

The first step in boosting your profitability is to conduct a thorough review of your existing business model.

This analysis should cover all aspects of the business, from supply chain management to customer relationship handling.

By understanding the nuances of each component, you can pinpoint inefficiencies and areas for cost savings that directly contribute to the bottom line.

Focus on your key drivers

Having surplus cash at the end of the year allows you to invest back into the business, fund your growth plans and increase the size of your own dividends and drawings as the owner.

To achieve these profits, it’s important to focus on the key financial drivers in your business.

To drive profits:

Boost Sales

Enhancing sales volume is a direct path to increasing net revenue. This can be achieved by investing in marketing, amplifying sales activities, and expanding business development efforts. Each of these initiatives should be tailored to meet the unique needs and preferences of your target market.

Increase Prices

Setting a higher price point can significantly enhance your profit margins, especially if you manage to keep the cost of goods sold low. This strategy needs to be balanced with market demand and customer value perception to avoid any negative impacts on sales volume.

Cut Costs

Operational costs and overhead expenses can diminish your profit potential. Implementing effective spend management and cost reduction strategies are crucial for maintaining a lean operational model. Regularly reviewing supplier contracts, reducing waste, and optimizing workflows are practical steps towards cost efficiency.

Reduce Taxes

Tax liabilities often represent a significant expense for businesses. Engaging in sensible tax planning and taking advantage of available tax reliefs can substantially lower your tax burden and increase your profitability. Consulting with tax professionals can provide insights into new tax saving opportunities and compliance strategies.

Talk to us about boosting your profits

At First Class Accounts Ovens & Murray and Busy01 Consulting, we help businesses like yours optimise their profit margins.

If you'd like to make your business more profitable, we're here to help:

• review your business model
• identify your key financial drivers
• proactively drive your profit performance.

Get in touch and let’s start boosting your profits.

5 ways to increase profit and improve cashflow

The dual goals of increasing profit and improving cash flow are usually at the forefront of every entrepreneur's mind, as both are essential for sustaining and growing your business. 

However, the path to profitability and strong cashflow is not always straight forward. 

Here, we explore 5 ways to increase profit and improve cashflow, offering actionable strategies that can improve the financial health of your business.

These insights are particularly beneficial for businesses navigating the complexities of the current economic landscape.

1. Sales

Profit increases when you increase sales; cash increases when you collect the money from customers. To increase both your profit and cash from sales:

• Delight your customers
• Generate more leads and referrals
• Convert a higher number of quotes or proposals
• Increase transaction frequency
• Increase transaction value

2. Invoicing

Profit increases when you send an invoice to a customer; cash increases when you collect the invoiced amount. To increase both your profit and cash:

• Set clear Terms of Trade
• Offer a small discount for early payment
• Agree the price in advance
• Stick to your payment terms
• Don’t do work for people who have overdue payments

3. Margins

Increasing your margins will increase your profit; collecting the increased margin will increase your cash. To increase both your profit and cash:

• Increase your prices
• Invoice faster
• Negotiate better payment terms with suppliers
• Reduce errors and rework
• Train and empower your team
• Increase your efficiency

4. Financing

Reduce your finance costs to increase your profit; borrow money for assets to increase your cash. To increase your profit and cash through financing:

• Spread the costs of assets over 3-5 years instead of buying them outright (e.g. vehicles)
• Borrow from a bank instead of a finance company
• Secure the asset purchases over ‘bricks and mortar’ (if possible)

5. Overheads

Reducing your overheads will increase both your profit and cash. To reduce your overheads:

• Negotiate with suppliers
• Measure your return on your spend (e.g. advertising, accounting fees, etc.)
• Review your subscriptions
• Go paperless

This is not an exhaustive list of ways to increase your profit and cash. We can help you identify specific areas of improvement in your business to increase both profit and cash. Contact us to find out how. 

"Never take your eyes off the cashflow because it’s the lifeblood of the business."

Sir Richard Branson

Seek support

Implementing these strategies requires a meticulous approach and an understanding of your unique business context.

At First Class Accounts Ovens & Murray and Busy01 Consulting, we provide bookkeeping and business consulting services that are tailored to your specific needs. We can identify areas of potential financial improvement and help you implement strategic solutions to enhance both profit and cash flow.

Don’t let the complexities of financial management hold your business back. Contact us today to learn how we can assist you implement these 5 ways to increase profit and improve cashflow.

Understanding your profit and loss statement

Your profit and loss statement (P&L) helps you understand your business performance and profitability over time. It’s sometimes called an Income statement and its main purpose is to list income and expenditure.

Whereas a balance sheet is a snapshot in time, the P&L shows transactions over a specific period of time. This can be a month, quarter, financial year or any other period, and it can be a stand-alone report or a comparative period report.

Together with the balance sheet, these two reports provide a comprehensive understanding of the financial position and performance of a business.

The profit and loss statement has two main sections: income and expenses.

These may be further subdivided depending on the complexity of the business and reporting requirements.

Income or Revenue

Income primarily includes main business activities such as sale of goods or services. Other income such as interest received, capital gains or income from secondary business activities is also reported.

Expenses

Expenses are usually divided into two sections: direct costs, or cost of goods sold, and expenses. Cost of goods are those that are directly linked to the provision of services or sale of goods. For example, if you buy widgets from a wholesaler and sell them at a marked-up value, the cost of the widgets is a direct cost, not an overhead expense.

Other types of direct costs might be importing and freight costs, contractor costs or certain equipment. Some direct costs are fixed, that is, they are the same from month to month, or they could be a fixed percentage of sales; others vary in value but are still related to the income producing activities.

Overhead expenses are all the other expenses required to run the business, regardless of the level of income: for example, rent, utilities, bank fees, bookkeeping fees, professional development costs, vehicle costs and staff costs. Many of these costs form the basis of working out your break-even point, or how much it costs just to open the doors for business.

There are some expenses which may be reported as a direct cost in one business but an indirect cost in another type of business, for example, merchant fees or contractor costs.

The Bottom Line

Total income minus total expenses results in the net profit (or loss), is often called ‘the bottom line’. Often business owners are just interested in looking at the bottom line, but a true financial picture requires an understanding of several reports and an ability to see the big picture that the reports are illustrating.

The P&L is a vital tool to analyse for trends over time

• What does your P&L tell you about relationships and ratios between sales and expenses, seasonal changes and annual trends?
• Have all your direct costs been allocated correctly?
• Have you recouped all billable expenses from customers?

Financial statements help you understand the big picture for your business. With deeper understanding of your business operations and performance you can make informed decisions about your business finances.

We can help you.

Are you confident in reading your profit and loss statement? Would you like to know more about the relationship between costs and revenue to make better business decisions? Contact us today to examine your financial reports with an experienced business advisor.

Contact us here.