Profitable businesses run out of cash all the time. The profit and loss says you made $200,000. The bank says you have $14,000 and payroll is Thursday. Both are right. They're measuring different things, and only one of them pays the wages.
This page explains how we manage cash flow for small businesses: the 13-week cash view, the three-way forecast, the four levers that move cash, and how we find profit that's leaking out of your margins.
Why is my business profitable but short of cash?
Because profit is earned when you invoice and spend when you're billed, but cash moves when money actually changes hands. The gap between the two comes from a handful of places.
| Where the cash went | Shows in profit? | Shows in the bank? | What to do |
|---|---|---|---|
| Customers who haven't paid yet | Yes, as income | No | Shorten terms, invoice faster, chase systematically |
| Stock on the shelf or in the warehouse | No, until it sells | Yes, it's spent | Order to forecast, clear slow lines |
| Loan principal repayments | No | Yes | Match loan terms to the life of the asset |
| Equipment purchases | Only the depreciation | Yes, all at once | Plan purchases into the forecast; consider finance |
| GST collected | No, it isn't your income | Yes, until the BAS | Set it aside every week |
| PAYG withholding and super | Wages yes, timing no | Yes, on a schedule | Set aside with each pay run |
| Income tax and PAYG instalments | Yes, as tax expense | Yes, on ATO due dates | Set aside monthly; check instalments against real profit |
| Owner drawings and dividends | No | Yes | Draw a fixed amount; true up at year end |
If two or three rows on that table are large for you, you have your explanation. Fixing them is the work.
What is a 13-week cash flow forecast?
It's a week-by-week view of the next quarter: opening cash, money in, money out, closing cash, every week for 13 weeks. Each week the oldest week drops off, the actuals replace the estimates, and a new week is added at the end. That's why it's called rolling.
Thirteen weeks is long enough to see the BAS, a quarter's payroll and your big supplier payments, and short enough to be accurate. It answers the question every owner actually asks: will we be OK?
Here is the shape of one, with hypothetical round numbers for a small services business.
| Week 1 | Week 2 | Week 3 | Week 4 | … | Week 13 | |
|---|---|---|---|---|---|---|
| Opening cash | $48,000 | $41,500 | $57,000 | $22,500 | … | |
| Receipts from customers | $30,000 | $36,000 | $28,000 | $34,000 | … | |
| Wages (net) and Payday Super | ($19,000) | ($2,500) | ($19,000) | ($2,500) | … | |
| Suppliers and rent | ($14,000) | ($18,000) | ($9,500) | ($12,000) | … | |
| BAS (GST, PAYG withholding and instalments) | ($34,000) | … | ||||
| Loan repayments | ($3,500) | ($3,500) | … | |||
| Closing cash | $41,500 | $57,000 | $22,500 | $38,500 | … |
Week 3 is the one you want to see coming. A business that knows about it in week 1 can bring forward an invoice, delay a discretionary purchase or arrange a facility. A business that finds out in week 3 calls the ATO.
Key point: Since 1 July 2026, Payday Super requires employer super contributions to reach the employee's fund within 7 business days of each payday (20 business days for a new employee or new fund), instead of quarterly. If your old cash plan relied on holding super for up to three months, that buffer is gone. Your forecast needs to reflect it.
Our guide on how to do a cash flow forecast shows how to build a simple version yourself. Our Payday Super guide explains the new deadlines.
How is a three-way forecast different?
The 13-week view is for managing cash. The three-way forecast is for making decisions. It projects your profit and loss, balance sheet and cash flow month by month, usually for 12 to 24 months, with all three linked so they always agree.
That linkage is the point. If you model a 15% sales increase on 45-day terms, the forecast shows the extra profit, the extra debtors on the balance sheet, and the cash you'll need to fund the growth while you wait to be paid. Growth often uses cash before it makes it.
Our cash flow forecast agent builds the monthly three-way model from your history and the assumptions we agree with you: revenue growth, margins, wages and hiring, debtor and creditor days, stock, capital purchases, loans and tax. The model is built so the balance sheet balances every month, and it flags assumptions that look out of line with your history, such as a big jump in growth or a sudden improvement in debtor days with nothing behind it. A qualified accountant reviews the assumptions and the result with you before anything is relied on.
What are the four levers that improve cash flow?
Almost every cash improvement comes from one of four places.
1. Get paid faster
Your debtor days measure how long, on average, customers take to pay you:
Debtor days = trade debtors ÷ annual sales (incl. GST) × 365
Example (hypothetical): A business with $1.2 million of annual sales and $200,000 owing at any time has debtor days of about 61. Cut that to 40 and roughly $69,000 of cash comes back into the bank once, permanently, without a single extra sale.
What usually works:
- Invoice the day the work is done, not at month end.
- Put clear terms on every quote and invoice, and enforce them.
- Take deposits and progress payments on larger jobs.
- Turn on automatic reminders and online card or bank payments in Xero.
- Review aged debtors every week with a named person responsible.
- Know when to stop work for a customer who doesn't pay.
2. Pay suppliers on time, not early
Paying on the due date rather than the day the bill arrives is free working capital. Don't stretch suppliers past terms: it damages relationships and can cost you discounts and credit. Ask for longer terms where you're a valued customer.
3. Hold less stock
Stock is cash on a shelf. Rank lines by how fast they sell and what they earn. Order the fast, profitable lines to a forecast; clear or stop the slow ones.
4. Earn more on each sale
Better collections give you cash once. Better margins give it every month. That's the next section.
How do we find profit leaks?
Most businesses have work they think is profitable that isn't. We look in five places.
| Leak | How we find it | Typical fix |
|---|---|---|
| Underpriced products or services | Margin by product, job, service or client | Price review; minimum charges; change scope |
| Labour costed at the wrong rate | Load wages with super, leave, workers compensation and payroll tax where it applies | Update charge-out rates and quotes |
| Quotes that blow out | Compare quoted versus actual hours and materials | Better estimating; variation process |
| Clients who cost more than they pay | Profit by client, including time spent on them | Reprice, renegotiate or let them go |
| Overheads that crept up | Twelve-month trend by expense line | Cancel, renegotiate or consolidate |
Example (hypothetical, rounded): A café's food cost has drifted from 30% of food sales to 35% over a year. On $600,000 of food sales, that five points is $30,000 of profit, and cash, a year. A menu reprice and tighter portion control can recover most of it.
Our hospitality and trades and construction pages cover the margins we watch in those industries.
How should you set aside tax?
Treat money you owe the ATO as never yours. Most cash crises we see start with GST and PAYG withholding being spent as if they were income.
A simple system:
- Open a separate bank account for tax.
- Each week (or each pay run), move the GST collected less GST paid, plus the PAYG withholding from wages.
- Each month, move an amount for income tax based on your forecast profit, not last year's.
- Pay Payday Super with each pay run.
- Pay the BAS from the tax account on the due date.
Our BAS due dates guide lists the dates. If you are already behind, our guide to ATO payment plans explains your options, and if you're a company director, read about director penalty notices now rather than later. Unpaid ATO debt also attracts the general interest charge, which the ATO sets each quarter and compounds daily.
What mistakes do we see most often?
- Running the business from the bank balance. The balance today doesn't include next week's BAS or this month's wages.
- Growing faster than cash allows. Big new contracts on long terms can break a profitable business.
- Buying equipment for the tax deduction. A $20,000 purchase saves at most a portion of that in tax and costs the whole $20,000 in cash.
- Drawing on profit before tax. The tax bill on that profit arrives later.
- Ignoring aged debtors until year end. Old debts are harder to collect every month.
- Using the ATO as a lender. It's an expensive one, and for directors it can become personal.
How does cash flow work with BPAG?
- Free strategy call. We look at your aged debtors, creditors, recent BAS and bank balance and tell you where cash is most likely stuck.
- Books current. We bring your Xero file up to date. Every forecast depends on it.
- First 13-week view. Built from real receipts and payments, with the BAS, wages and loan repayments in the right weeks.
- Three-way forecast. For decisions over the next 12 to 24 months. Our cash flow forecast agent drafts it; your accountant reviews it with you.
- Fix the levers. Debtor process, terms, stock and pricing, one at a time, starting with the biggest dollar effect.
- Weekly and monthly rhythm. The 13-week view is updated weekly; the forecast and margins monthly. After each BAS, our post-BAS review agent turns unusual movements into questions for you, so problems surface while they're small.
BPAG is an AI-native firm running on Nagaris. The agents draft the forecast and the analysis; qualified accountants review and sign off, and nothing is sent to you without a person approving it.
"We have been with BPAG for almost a year now and have felt significant improvement with the business, our own knowledge and motivation… BPAG are by far the best." Veronica Thomas, Google review
What does it cost?
Monthly management reports and KPI analysis are part of our Business Insights plan, from $249 per week + GST. Strategic cash flow forecasting and a monthly CFO strategy meeting are part of our Fractional CFO plan, from $499 per week + GST. Both include the bookkeeping, BAS and company tax return underneath. Details are on our pricing page, and our fractional CFO and advisory page explains the CFO plan in full.
An honest alternative: if your business is small, steady and seasonal in a predictable way, a simple spreadsheet you update weekly, plus a separate tax account, may be enough. We're happy to set that up and step back.
What should you send us?
- Xero access, or bank statements for the last three months
- Aged debtors and aged creditors reports
- Your last four BAS and any ATO statements or payment plans
- Loan, finance and lease agreements, with repayment schedules
- Your payroll calendar and headcount
- Big known items in the next six months: purchases, contracts, seasonal dips, tax bills
- Your price list or quoting method
Reply to our email or SMS with documents or photos from your phone. No portal password needed.
Frequently asked questions
How quickly can you build a cash flow forecast?
If your books are up to date in Xero, a first 13-week cash view usually takes days rather than weeks. A full three-way monthly forecast works best with a couple of years of history and needs a conversation about your plans, so it takes a little longer. If the books are behind, catching them up comes first.
What's a healthy cash buffer for a small business?
There's no single right number. A common starting point is enough to cover two to three months of fixed costs, wages and tax, more if your income is seasonal or lumpy. Your forecast tells you the low point in the next few months, which is a better guide than a rule of thumb.
Should I use a business overdraft or line of credit to manage cash flow?
A facility is useful for timing gaps you can see coming and know will reverse, such as waiting on a large debtor. It's dangerous if it's funding losses, because the debt grows while the problem stays. The forecast shows which situation you're in before you sign.
Can you chase my debtors for me?
We set up the process that makes chasing systematic: clear terms, automatic reminders in Xero, a weekly aged debtors review and escalation steps. Most clients prefer the calls on long-overdue accounts to come from them, because it's their customer relationship. We'll help script those conversations and tell you when to involve a debt collector or lawyer.
What if I already owe the ATO?
Deal with it early. Keep lodging on time even if you can't pay in full, and talk to us about a payment plan before the debt grows. For company directors, unpaid PAYG withholding, GST and super can become personal under the director penalty rules, so this is not a debt to leave until last.
Do I need to change accounting software?
Not necessarily. We work best in Xero because its bank feeds and reporting make weekly cash work quick, and most of our clients use it. If you're on another system we can start there and recommend a move only if it saves you time or money.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.