​Understanding and managing your cash flow

Why good cash flow management is important

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

Why your cash flow cycle is critical

It’s essential to understand your cash flow cycle, which boils down to whether you’ve got more money coming in than going out. If you have more money going out, you’ll have to address it quickly.

If cash outflows exceed cash inflows over time, it can lead to cash shortages and financial pressure, so it’s important to identify and address any gaps early. Understanding your cash flow cycle can help you anticipate shortfalls and make more informed decisions.

When you’re focused on running your business, it can be easy to lose visibility of your cash position. Staying across your cash flow helps reduce the risk of running out of cash unexpectedly.

Keeping track of cash flow in and out

It’s best to establish a system to track the flow of cash, such as accounting software that tracks transactions in real time. If a spreadsheet or manual system works efficiently for you, that’s great too. 

However if you're at a very early stage of your business, or haven’t started yet, one of the first tasks you should do is separate out your personal and business expenses. This will make your business finances easier to manage and will set you up for success.

If you’re a new business, it’s important to check not only sales, but also expenses, especially when more and more costs are through online subscriptions or direct debits.

What you should monitor

It’s important that your tracking process monitors:

• whether sales are stable, growing or declining
• seasonal patterns and how to manage quieter periods
• which products or services are performing best
• which expenses are highest and whether they can be reduced.

It’s a great idea to get help to analyse what’s going on, especially if your business is in its early stages. Your accountant is a smart option, and NAB offers support through its business bankers too. Get in touch with us to discuss your cash flow circumstances.

Payday Super and your cash flow

From 1 July 2026, super will become a regular payday cost rather than a quarterly lump sum for many businesses. This means you’ll need to budget for employee super at the same time as you run payroll, so contributions can be paid with each pay cycle.

Paying super more often may change how you manage working capital and short-term cash availability. If super payments aren’t planned for as part of each pay run, they could put pressure on the cash your business needs for other expenses.

To prepare, update your cash flow forecasts to include super in every weekly, fortnightly or monthly pay cycle. You may also want to set aside super amounts as soon as payroll is processed, either in a separate account or cash reserve, so the money is ready when payments are due.

Practical ways to prepare

• Build super into your regular cash flow forecasts.
• Set aside super amounts as soon as each pay run is processed.
• Review whether your current working capital can support the new payment timing.

Watch our Payday Super webinar to learn more about what’s changing and how to prepare.

Ways to increase profitability

For most businesses, the easiest way to improve profits isn’t landing the next big client (though it can be). It’s improving the little things, such as:

• Increasing prices by 5 percent (or a small enough margin that doesn’t cause alarm).
  
• Collecting money owed to you faster.
  
• Investing spare cash to gain maximum interest. NAB’s Business Cash Maximiser Account is an option for this.
  
• Checking that you’re not paying too much for overheads like power, the Internet and office supplies. These can be small amounts but they add up over time. Now that you’ve been in business for a time, you can probably look to renegotiate some of your earlier agreements.

Is more cash needed?

There could be any number of reasons that you might need more cash after you’ve launched. For example, sales and expenses haven’t been what you forecast. Or your business is going so well you can’t keep up and need to expand faster.

Steps to improve your cash flow position

If your business is experiencing cash flow pressure, you can:

• review and reduce non-essential expenses
• improve how quickly you invoice and collect payments
• renegotiate supplier terms where possible.

Learn how to keep your business cash flow positive.

NAB cash flow solutions

We can help in a number of ways. These include:

• a Business Overdraft on your NAB Everyday Business Account if you only need a short-term cash injection or a NAB QuickBiz Loan
• NAB’s Vehicle and Equipment Finance if you want to scale up faster than you thought
• NAB’s range of Business Loans to suit your circumstances.

Finally, it’s easier than you think

Decide what method is best for you to keep tabs on your cash cycle, and make a commitment to keep a close eye on your bank balances on a regular basis. Upgrade from manual systems to accounting software systems that give real time data if you need to. Also make sure you have your banking set up how you want it and get the information you need to stay on top of your cash flow.

Once you’re getting an accurate cash picture of your business, you’ll be able to make better decisions to help lock in long-term success.