When the numbers say you’re doing fine but your bank account says otherwise, it’s time to take a closer look. Even highly profitable businesses can run into serious trouble if they don’t have enough cash on hand to meet their obligations. If you’ve ever stressed about paying bills, covering payroll, or making your next tax payment, you’re not alone.
Cashflow issues are preventable. By identifying the early warning signs and knowing how to respond, you can avoid major disruptions and take control of your financial stability.
In this blog, we’ll cover three common signs your business cash flow might be unhealthy, plus practical tips to monitor and improve it.
1. You’re Constantly Robbing Peter to Pay Paul
If you’re regularly weighing up which bills to pay first, delaying payments to suppliers, or transferring funds between accounts just to stay afloat, that’s a clear warning sign. These habits don’t always mean the business is unprofitable, but they do suggest that cash inflows and outflows are out of sync. Without active planning, this creates unnecessary stress and a risk of missed obligations.
This kind of cash flow pressure often stems from timing issues, not necessarily a lack of income. Inconsistent payment cycles, late-paying clients, and fixed costs that come due before income arrives are all contributing factors.
What you can do:
Create a weekly cash flow forecast
Monthly reports provide a broad overview, but cash moves on a much shorter timeline. A weekly forecast allows you to anticipate tight spots in advance, giving you room to adjust. It helps identify when income is expected to clear and how that aligns with upcoming expenses. A simple spreadsheet or forecasting tool reviewed each week can provide invaluable clarity and confidence.
Negotiate better payment terms.
If suppliers require payment within a few days, but clients typically pay after three weeks, the mismatch can strain your cash flow. Speak with suppliers about extending payment terms, and encourage faster payments from customers by offering early payment discounts or using automated invoice reminders. Small adjustments here can ease pressure without needing to increase income.
Build a cash buffer
A cash buffer acts as a financial cushion during slower periods or when unexpected expenses arise. Even setting aside the equivalent of two weeks’ business expenses can reduce day-to-day financial stress. Consider making small, automatic transfers into a reserve account to build this up gradually over time. Treat this buffer as non-negotiable, not optional.
2. You Rely Heavily on Credit to Get By
Occasional use of credit can be a useful tool, but when a business begins to rely on overdrafts, credit cards, or short-term loans every month to meet ordinary expenses, it signals an underlying cash flow issue. Consistent borrowing to fund operations can lead to rising interest costs, tighter margins, and dependency that is difficult to reverse.
What you can do:
Review fixed and variable costs
Start by categorising and reviewing all business expenses. Identify any recurring payments that are unnecessary or underutilised, such as unused subscriptions, inflated software packages, or discretionary spending. This review should focus on reducing waste without compromising essential functions.
Reassess pricing and margin strategy.
If prices haven’t been adjusted in a while, rising costs may have quietly eroded profitability. Businesses that undercharge or fail to keep up with inflation can experience steady cash decline despite solid sales. Conduct a margin review to ensure pricing covers both direct and indirect costs and reflects the value provided to clients.
Implement rolling forecasts
A rolling 13-week cashflow forecast, updated regularly, offers a dynamic picture of expected inflows and outflows. This approach allows decision-makers to proactively plan for gaps, adjust spending, or explore finance options early if needed. It also supports smarter investment planning and hiring decisions.
3. You’re Surprised by Your Tax or Payroll Bills
Missing tax payments or scrambling for payroll funds is often a symptom of inadequate planning. These obligations are predictable, and being unprepared for them can lead to costly penalties and damage to business credibility. Managing these responsibilities effectively is essential for long-term sustainability.
What you can do:
Set aside funds in separate accounts
To avoid spending money allocated for tax or payroll, transfer a percentage of income into dedicated accounts as soon as it’s received. For example, setting aside funds for GST, income tax, or employee wages ensures the money is available when needed. Automating these transfers helps build the habit consistently.
Use accounting software features to monitor obligations.
Many accounting systems offer tools to estimate tax liabilities, track payroll accruals, and schedule reminders. Using these features ensures that nothing is overlooked and helps build awareness of upcoming commitments. Even basic reporting functions can provide visibility that prevents surprises.
Seek ongoing professional guidance.
Working closely with an accountant or financial advisor provides an external perspective on cash planning and risk. A professional can help assess seasonal patterns, ensure obligations are planned for in advance, and advise on structuring cash reserves. This support reduces the mental load of managing everything internally.
Bonus: Know Your Break-Even Point
Your break-even point is the minimum revenue you need to cover all fixed and variable costs. If you don’t know this number, you’re flying blind. Once you do, it becomes much easier to price your services, assess performance, and plan for growth.
Cashflow stress is one of the most common challenges we see with SMEs, and often, it’s avoidable with a few changes in systems and planning. Whether your business is growing fast or going through a rough patch, managing your cash wisely gives you options, confidence, and peace of mind.
If you’re not sure where your cash flow stands, or you know it needs improvement, don’t wait until it’s critical. A fresh set of eyes and the right tools can make all the difference. Sometimes, just having someone walk through the numbers with you can bring a level of clarity that turns overwhelm into action.
At Black Arrow, we work alongside business owners to bring that clarity. We help you understand the story your numbers are telling, highlight the areas that need attention, and build simple, reliable systems to manage cash flow confidently. Our approach is grounded in practical insight tailored to how you run your business day to day.
Whether you need a short-term plan to steady the ship or long-term guidance to grow with confidence, we’re here to help you feel more in control of your business finances.
The content in this blog is intended to provide general insights and should not be regarded as professional advice. Each business situation is unique, and we recommend consulting with a professional for specific guidance. At Black Arrow Business Studio, we specialise in accounting and consulting services designed to support your business’s growth and success. Feel free to contact us for expert advice and customised solutions.
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