Discover why revenue doesn’t equal cash in bank as the gap between invoicing and payment can sink otherwise profitable businesses without weekly cash position tracking
What’s happening: Finance professionals with visibility into thousands of SME loans are documenting recurring financial pitfalls. Cash flow mismanagement, ATO debt treatment as cheap credit, and wrong finance structure choices consistently trip up even smart operators.
Why this matters: For businesses managing tight margins, these traps create cascading failures. When revenue is confused with cash, tax debt becomes expensive, and loan structures mismatch actual cashflow, survival becomes difficult regardless of operational competence.
Volume provides perspective that individual experience can’t. Alex Molloy, Co-founder and CEO of Valiant Finance, has facilitated loans worth over 2.5 billion dollars for more than 20,000 Australian SMEs.
“After facilitating over $2.5 billion in business loans for more than 20,000 Australian SMEs, we’ve seen these common financial pitfalls trip up even the smartest operators,” Molloy explains.
The first trap involves confusing revenue with available cash. The distinction seems obvious but catches many businesses.
“Cash flow mismanagement – Revenue doesn’t equal cash in the bank,” Molloy states directly. “The gap between invoicing and payment can sink an otherwise profitable business.”
This aligns with extensive research showing that cash flow is the lifeblood of any business, allowing owners to pay staff, suppliers, and meet tax office obligations on time.
The solution requires different metrics and buffers. “Track your actual cash position weekly, not just your P&L, and build a buffer for seasonal fluctuations or unexpected expenses,” Molloy advises.
The second trap involves treating ATO debt as convenient financing. That strategy just became significantly more expensive. “Ignoring ATO debt – Many businesses treat tax debt as a convenient line of credit, but this strategy is expensive,” Molloy warns.
Recent regulatory changes altered the economics dramatically. “As of 1 July 2025, the General Interest Charge on tax debt is no longer tax deductible, effectively increasing the real cost by 25% for most businesses,” Molloy explains.
The mathematics are stark. “At 11.17% compounding daily, a $50,000 tax debt now costs you the full amount with no tax relief, that’s over $5,500 annually,” Molloy calculates. “Address tax debt proactively before it damages both your cash flow and your ability to secure future financing.”
As the ATO has intensified debt collection activities, this warning becomes increasingly urgent. The third trap involves finance structure selection. Desperation drives poor choices. “Choosing the wrong finance – Not all business loans suit all situations,” Molloy notes. “Taking what you can get rather than what you need leads to expensive mistakes.”
Beyond interest rates, structure determines viability. “Consider loan structure, repayment terms, and how they align with your actual cash flow, not just the interest rate,” Molloy concludes.
For businesses evaluating financing options or carrying tax debt, Molloy’s experience provides valuable guidance. The volume of loans he’s facilitated means these patterns emerge from thousands of data points rather than isolated examples. Understanding how to spot business trouble early becomes essential for avoiding these common traps.
Revenue isn’t cash. Tax debt is expensive, especially post-July 2025. Wrong finance structures cause problems regardless of interest rates. Those three traps are avoidable with proper understanding and discipline.
But they consistently catch smart operators who assume profitability means financial health.
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