Five experts share the practical habits that keep small businesses financially healthy, no matter the economic climate.
What’s happening: Cash flow problems remain one of the most common threats to small business survival in Australia.
Why this matters: Rising operating costs, higher borrowing rates and softer consumer spending have squeezed SMEs from multiple directions.
For small business owners navigating an unforgiving economic environment, cash flow management has moved from a back-office concern to a front-line survival skill. Advisers say the businesses most at risk are often those that track spending informally or react to problems after they have already escalated.
Lisl Pietersz, Solopreneur, Communications and Transition Coach at University of Sydney Business School and AGSM at University of NSW, works with small business owners and entrepreneurs and says the foundation starts with discipline and foresight. “Make forecasting your bestie,” she advises. “Be sure to forecast your invoices and chase up late payments. A cloud accounting tool can help by flagging late payments before they get out of control. Also, ensure that you understand your market and economic conditions, such as the impact of future interest rate rises, so you can prepare for fluctuations in income and cash flow.”
Pietersz adds that AI-powered tools, including cloud accounting platforms that deliver real-time financial data, are increasingly accessible to small business owners at a reasonable cost. Her broader point is that cash flow management requires a strategic lens, not just a spreadsheet. “Cash flow management goes beyond reviewing the numbers,” she says. “It is about strategic planning and being financially proactive so you can ease your cash inflows and outflows.”
Visibility is everything
Fabian Calle, Managing Director, Small and Medium Business, SAP Concur Australia and New Zealand, echoes the importance of real-time visibility, pointing to automated financial processes as a key enabler for businesses that want to stay in control of spending. “Automating financial processes, such as expense reporting and invoice management, provides near-instantaneous insight into spending patterns,” he says. “This transparency lets business leaders make informed decisions and adjust operations swiftly to ensure a steady cash flow.”
Calle also recommends consolidating all company expenditures into a single view, which he says makes it far easier to identify cost-saving opportunities, reduce redundant spending, and streamline auditing. Beyond visibility, he points to data analytics as a forward-looking tool. “Analysing spend trends and patterns lets business leaders better predict future cash flow needs and adjust budgets accordingly to proactively manage current finances while positioning the company for long-term growth and profitability.”
Steven Nicholson, Director at GearChange Business Advisory, is direct about where many SMEs fall short. “You need a budget, and a cash flow forecast for the next 12 months. Without visibility and a target to report against, how can you monitor what you are spending?” He notes that a well-constructed forecast does more than track; it highlights the pressure points in advance. “Your cash flow forecast will highlight the times when cash flow gets tight, BAS and super payments, wages time. Visibility enables you to make decisions to manage cash flow through these periods.”
Nicholson also encourages business owners to use budget preparation as an opportunity to cut dead weight. “Remove all non-essential expenses, such as subscriptions you no longer use, spend that adds little value. Shop around for the best deal on utilities, telecoms and insurance. Don’t let them renew without reviewing.” For business owners who lack the time or skills to manage this themselves, he is unambiguous: “Outsource this to the experts if you don’t have the time or expertise to do this yourself. Your business will thank you for it.”
David Price, CEO at Peninsula Australia and New Zealand, says the starting point for any cash flow review is understanding exactly where money is coming from and where it is going. “Assess your income statement, balance sheet and cash flow statement. Review your bank accounts and understand your income and expenses. Track where your money is coming from and where it’s going. Are your accounts receivable growing, indicating slow collections?”
Price recommends reviewing all company assets and liabilities as part of that process, including whether underutilised assets could be monetised to improve cash position. He also advocates for building a detailed cash flow forecast. “A well-constructed cash flow forecast is a powerful tool for navigating a business turnaround. By anticipating future cash needs, you can predict potential money shortages before they happen, make informed investment decisions, and use your cash flow forecast to monitor your progress.”
Make payments work for you
Elise Balsillie, Head of Thryv Australia and New Zealand, brings the conversation back to the basics of how businesses collect money. She points to a simple but often overlooked truth: a business can be profitable and still run into cash flow problems, typically because of a failure to collect receivables and not being paid on time.
Her recommended solutions are practical and low-cost. “One of the best ways to manage the books is by integrating cloud-based accounting software,” she says. “The adoption of software can streamline invoicing and payments, allowing customers to pay invoices from their phones and businesses to track and secure overdue payments with automated follow-ups.”
She also suggests building in incentives. “Another option is to offer an incentive for customers to pay on time. This could include discounts or special offers for early payments.” The cumulative effect of small, consistent changes can be significant. As Balsillie puts it: “A few simple changes in the way businesses collect payments can help them remain cashflow positive while freeing up time to focus on business growth.”
This article draws on expert commentary originally published in the Let’s Talk series on Dynamic Business.
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