Café BAS + PAYG Buffer (2025): The “3 Buckets” System Using a LOC (Without Getting Burnt)
Café BAS + PAYG buffer for café owners – Switchboard Finance
☕ Café · tax timing buffer ·
Café Hub ·
Business Owners Finance Hub · 2025
Want a 2025 café system that stops BAS + PAYG weeks from nuking your bank balance? This “3 buckets” setup uses a Business Line of Credit for timing only — not as a permanent crutch.
If you’re still mixing tax money with ops money, you’ll always feel “busy but broke”. This is the clean separation that protects Cashflow (even in quiet weeks).
Start here (hero): Cash Flow vs Growth: the café balancing act · Pack: Café Cashflow Pack
Bucket the money first (then use the LOC for timing)
You don’t “need more revenue” — you need separation. The buckets stop tax timing from stealing supplier money, rent money, and wage money.
If you want the quick LOC context first: Why every café needs a LOC. If you’re comparing alternatives: Café LOC vs Working Capital.
| Bucket | What it’s for | Hard rule | What the LOC can do |
|---|---|---|---|
| Bucket 1: Tax | GST/BAS + PAYG set-asides (timing risk) | Only pays ATO bills (never rent, wages, suppliers) | Bridge short gaps via a single Drawdown rule |
| Bucket 2: Wages buffer | Quiet-week protection (your “sleep at night” bucket) | Top up in good weeks before anything “nice to have” | Don’t “park” LOC funds here (keeps the story clean) |
| Bucket 3: Ops | Rent + suppliers + daily running costs | Never pay tax from ops (that’s how surprises happen) | Ops stays normal; LOC stays “timing-only” |
The LOC rules (so you don’t get burnt)
A LOC is a tool for timing — not a tool for “random ops”. If you fund everyday shortfalls, the balance creeps up and the facility becomes a habit.
Keep it approval-friendly: show a simple Cash Flow Forecast that explains when the balance drops back after the tax week passes. If suppliers are your issue, read: Café LOC for supplier bills.
- Set a Credit Limit for your worst “tax + slow week” — not your best month.
- One purpose only: tax timing. Upgrades belong in a separate plan (often a Working Capital Loan or Invoice Finance).
- Keep bank behaviour tidy (less chaos helps your Cash Flow Assessment), especially if you run Bank Feeds.
If you need more than timing, don’t force it into a LOC
If the gap is structural (seasonality, margins, staff costs), a LOC can mask the problem — not solve it. That’s when you compare cashflow options properly under Business Loans.
A simple way to decide: LOC = timing. Working capital = planned buffer. Invoice finance = get paid faster. (Full café system view: LOC + WCL + Invoice “safety net”.)
The “3 buckets” system works because it separates tax from operations. You quarantine tax money, run ops normally, and only use a LOC for timing — not lifestyle.
- Hero: Cash Flow vs Growth (café)
- Hub: Café Hub (start here if you’re building a full café finance plan)
- Pack: Café Cashflow Pack
- Compare: Business Line of Credit, Working Capital Loans, Invoice Finance
- Money page: Low Doc Asset Finance (for planned upgrades done properly)
FAQ
A LOC is a revolving Facility. Lenders focus on your Cash Flow Assessment and whether the purpose is “timing buffer” (good) or “ongoing loss funding” (red flag).
A simple Cash Flow Forecast that maps the tax week, plus a clean paper trail (quotes/invoices) and a clear repayment plan. Keep it consistent with your Loan Agreement story.
Size the limit and repayments to your lowest-trade period. That’s what Servicing really tests. If the gap is bigger than timing, you may be better comparing options under Business Loans.
Know your exit costs and timing. If you close or restructure early, understand Early Termination mechanics and make sure you have a clean Payout Figure.
Ideally Trade Terms handle suppliers, and the LOC handles tax timing. If you constantly bridge suppliers with borrowed money, you can end up in an Overdraft-style habit without calling it that.
For tax source-of-truth, start at ato.gov.au.
Disclaimer: This content is general information only and isn’t financial, legal, or tax advice.
