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Cashflow

Cashflow is the movement of money in and out of your business over a set period (daily, weekly, monthly, yearly). It tracks real cash coming into your bank accounts and real cash going out for expenses, loan repayments and tax – not just paper profit on a Financial Statement.

Every sale, supplier payment, wage run and loan repayment hits your cashflow. That includes repayments on any Asset Finance facilities and the pattern of money shown on your Bank Statements, which lenders use to understand how your business actually behaves day to day.

Why It Matters

Most businesses don’t run into trouble because they’re never profitable – they run into trouble because cashflow is tight at the wrong moment. You can have strong sales and still miss repayments or ATO obligations if cash comes in too slowly and goes out too quickly.

Healthy cashflow lets you cover wages, rent, fuel, suppliers and finance repayments on time, even when work is seasonal or invoice terms are long. It underpins approvals for Business Loans and ongoing access to Low Doc Asset Finance and Low Doc Vehicle Finance.

It’s a daily reality for clients in the Tradie Hub, Truckie Hub, Café Hub, Whitecoat Hub and the broader Business Owners Finance Hub, where delayed invoices and lumpy work can quickly squeeze cash.

How Cashflow Works in Practice

  • Opening position: You start the period with a certain bank balance (opening cash).
  • Cash inflows: Customer payments, invoice collections and other income land in your accounts.
  • Cash outflows: You pay suppliers, staff, the ATO and make repayments on loans, leases and other commitments.
  • Closing position: Opening cash + inflows – outflows = closing cash (your end-of-period buffer).

Finance can be structured to support smoother cashflow – for example by choosing the right Term Length on Working Capital Loans, using Invoice Finance to speed up debtor collections, or avoiding a poorly timed Balloon Payment that lands in a slow season.

Benefits of Managing Cashflow Well

  • Confidence you can pay wages, rent and fuel on time
  • Less stress around BAS, tax payments and ATO obligations
  • More room to handle slow months or unexpected repairs
  • Stronger position when applying for new vehicles, equipment or Business Line of Credit facilities
  • Ability to invest in growth instead of constantly playing catch-up

Switchboard’s cashflow content – including 9 Cashflow Mistakes SMEs Make, Business Cashflow System (WCL + LOC + Invoice) and Low Doc Cashflow Loans – is built to show how finance can support, not strain, your day-to-day cash.

Related Switchboard Resources

For official guidance on managing small business money and obligations, see business.gov.au.

What’s the difference between cashflow and profit?
Profit is an accounting result on your Financial Statements. Cashflow is the real movement of money in and out of your accounts. A business can show a profit on paper while still being short of cash if customers are slow to pay or costs are badly timed.
What is positive vs negative cashflow?
Positive cashflow means more money is coming in than going out over the period, so your bank balance grows. Negative cashflow means the opposite – you’re burning more cash than you’re bringing in, which may be okay for short growth phases but dangerous if it’s ongoing and unmanaged.
How can I improve my business cashflow?
Common strategies include tightening debtor terms, smoothing large expenses, and using the right tools like Working Capital Loans, Business Line of Credit and Invoice Finance. Switchboard’s Business Cashflow System guide explains how these fit together.