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Cashflow Tips – Managing cash flow in a small business – How a cashflow can help

Cashflow Tips - Managing cash flow in a small business – How a cashflow can help

Cashflow Tips – Managing cash flow in a small business – How a cashflow can help

Here are some great tips from a great resource for managing cash flow in a small business, at the Queensland Govt site at: and under the Running a Business then – Finances cash Flow.

Managing Cashflow –

Your cash flow is the money you have coming in from revenue and going out for expenses. Good cash flow management will ensure you always have money available for paying your expenses when they are due.

Even profitable businesses can fail if cash flow is not managed properly. If you don’t have enough money available to pay your lenders or suppliers, banks may foreclose and suppliers could cut supplies.

There are many areas in your business that can impact on your cash flow. It is important to understand how customer payment terms, supplier payment terms, loan payments, future spending decisions and other items can affect your cash flow.

This guide will help you to manage your cash flow and understand how to use cash flow analysis to inform business decisions.

Plan and Monitor Cashflow

Planning and monitoring your cash flow is one of the most important things you can do when running your business. This should also include how you will address cash shortfalls or surpluses if they occur.

Forecast cash inflows against cash outflows

A cash flow statement will help you forecast your money coming in and going out. Forecasting your cash flow is usually done annually and broken down into monthly amounts. Always record the amount in the month it is expected to be spent or received. For example, electricity is usually paid quarterly so should be recorded in the month it is due.

You can use a cash flow template to forecast your annual cash flow. You will need to estimate and record the following amounts for each month:

  • total monthly cash inflow – includes sales, sales of assets, capital injections from borrowings or owners funds, interest revenue and any other sources
  • total monthly cash outflow – includes items such as purchases, loan payments, supplies, telephone, electricity, wages and any other bills
  • net cash flow – take the total outflows from the total inflows to see if there is more money in or out
  • opening balance – record your cash available at the beginning of the month
  • closing balance – calculate your funds available at the end of the month by adding the net cash flow to the opening balance. This will become your opening balance for the next month. Note: If your net cash flow is negative, this amount will be reduced.

Include GST when inserting amounts for some cash inflows (particularly sales) and many cash outflows (particularly purchases). Calculate the difference between total GST inflows and total GST outflows and insert this as GST payments.

Different businesses are subject to differing GST requirements, so you should seek specific advice from your tax adviser. Learn more about working with business advisers.

Monitor actual inflows against outflows

As each month passes it is important to record your actual cash flow. This can be compared against your forecast to see if you are tracking as planned. You may find you need to review and adjust your forecast as amounts change over the year. Always make sure your payments received match invoices issued, and receipts and payments match.

Invest surplus cash or arrange loans

If you forecast excess cash for some months, it can be worth putting it in short-term investments to maximise your income. If you anticipate any shortfalls in cash, you may want to plan to use this invested excess, or seek for an appropriate loan to temporarily cover your costs. Don’t forget to include these extra payments or receipts in your cash flow forecast.

What are your thoughts? Call for FREE 30min advice / strategy session today!

0407 361 596 Aust

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email or call 0407 361 596 Australia


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Bookkeeping – New Year Resolution – Organising bookkeeping tips for small business

Bookkeeping – New Year Resolution - Organising bookkeeping tips for small business

Business Tax Tips – Reconciling GST accounts in the Balance Sheet and GST Reports – How to understand

You may be working as the bookkeeper for a business. Or you own your own business and you find you have several roles to juggle including production or service, marketing, operations, sales, dispatch, invoicing and bookkeeping of the accounts. These must all be done!

Two main areas need to be organised – the bookkeeping records, and the money (bank and cash and credit cards).

Starting your bookkeeping accounts correctly (or re-organizing your current books and accounts)

Most business owners don’t like doing the books! But if you want to be in business then accept that the books and finances are one of your responsibilities and JUST DO IT or PAY SOMEONE to do it.

To keep accounts organised, you need a set of systems to ensure:

  • ALL sales and expenses are recorded and transactions aren’t forgotten (eg Cash receipts);
  • To keep all documents required by law easy to find and neat and tidy;
  • Good records of conversations with customers or suppliers; and
  • At year end – a good set of all required data and reports so your accountant can complete your tax return quickly and efficiently.

Bank and Credit Cards

  • First, use a dedicated business bank account and credit card. Processing your records is much easier if you have these separate bank and card accounts (even if only a personal credit card in your name to start) that you only use for business transactions.
  • Secondly, request that all statements, including bank, debit card, credit card and petrol accounts, are sent on a monthly basis. That’s because the key aspect of processing your financial documents is reconciling them on a monthly basis.

If you follow these suggestions, nearly all of your income and expenses will be captured in statements from both your bank account and credit card account and account keeping is much easier.

The Australian Tax Office (ATO) has a good overview of what is required, and they explain more as follows – Managing your Small Business Records

Good records help you make sound business decisions, monitor your business health, analyse your cash flow and demonstrate your financial position to lenders, businesses, accountants and prospective buyers.

Under tax law, your records must explain all transactions and be:

  • in writing, either on paper or electronically;
  • in English, or in a form that we can readily access and convert into English;
  • kept for five (5) years (although some records need to be kept longer).

If proper records are not kept, we may impose penalties.

You can choose to look after your record keeping or engage a bookkeeper or registered agent to do all or part of this work. We can also give you advice and help on record keeping systems.

Find out about:

Getting help with setting up your record keeping system early will save you valuable time and money in the long term.

You should consider:

These are 6 steps to get your books/accounts off to the right start (or improve current systems). Coming up next month we will look at some templates that can help you get organized and keep you and your accountant happy!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email or call 0407 361 596 Australia