One of the most common questions clients ask is how to improve business cash flow. Our experience shows that as our Sunshine Coast clients build their knowledge and implement strategies that create clarity around cash flow, their business outcomes improve—especially in the trades and construction industry, where costs such as materials and labour can fluctuate due to factors outside your control.
Knowing where you stand from a cash flow perspective is vital. Below are nine proven tips to help you take control of cash flow and be better prepared for unexpected events.
Tip 1 – Create a budget
Creating a budget for your business may sound daunting, but it makes all the difference when you have a clear blueprint for expected costs and revenue. Consider these key questions:
- Do you have a plan for the upcoming financial year?
- Do you know what sales you need to achieve to cover your costs?
- Can you see any areas for improvement?
- Is something costing you more than you expected?
- Do you need to improve your profit margin on invoices to adequately cover your jobs?
Here is an article that delves deeper into budgeting.
Tip 2 – Super and tax liability bank accounts
Set up separate bank accounts for super and for your tax liabilities.
Super compliance account
When you complete your pay runs, put aside the correct amount for PAYG withholding and super payments. From 1 July 2026, employers will be required to pay super with every pay run—so it’s a good idea to build the habit now.
BAS and GST payments
When you receive payment for invoices, put 10% of that amount into your GST account in preparation for your upcoming BAS lodgement. In addition, set aside the correct amount for PAYG withholding from your pay run. Accumulating funds like this means that when your quarterly BAS is due, you already have the cash available to pay it.
Tip 3 – Keep on top of your Xero file
Allocate time every week to manage your Xero (or other accounting software) file and stay on top of invoicing and bills. Choose a time when interruptions are less likely and block it out in your calendar. Consistency is key.
Ensure your payment terms are clearly stated on invoices and follow up late payers. Efficiently chasing overdue amounts—especially for regular clients—sets the expectation of prompt payment and improves your chances of being paid on time.
Tip 4 – Invoice projects in stages
Cost and quote your jobs in stages. Once each stage is complete, invoice for that portion of work. This makes it easier for customers to pay smaller amounts instead of one large lump sum at the end, and it creates a more consistent flow of income. It also helps you identify early if a customer is struggling to pay, so you can manage the situation sooner.
Tip 5 – Set up tracking for individual jobs
Clarity is key to managing cash flow, and tracking spending on individual jobs is one of the best ways to get the detail you need. You can set up tracking categories and options in Xero so you can see whether each project is tracking to budget and adjust early to avoid costs blowing out.
Here are instructions to set up tracking categories and options.
Tip 6 – Build a business cash flow buffer
Building a cash flow buffer is one of the best ways to protect your business from unexpected costs—and to be ready for unexpected opportunities.
You can approach this in two ways:
- Commit to setting aside a specific amount into a dedicated savings account each month.
- Set a lower cash limit in your main business bank account. At the end of each month, transfer any amount above that limit into your dedicated savings account.
Name this account so you’re not tempted to dip into it—for example, “Storm Season” or “Emergency Only”, or whatever language works for you.
Tip 7 – Cut out the middleman
Review where you purchase materials and supplies and whether a middleman is involved. Do you buy through a retailer for everything, or could you go directly to a manufacturer or wholesaler? Cutting out the middleman can put more money back in your pocket. Many clients who have implemented this have saved around 4% to 6% on purchase costs.
Tip 8 – Review payment terms
Regularly review your payment terms. Are your terms consistent? Are you offering extended payment terms that some customers don’t actually need? Could you shorten terms to bring cash in sooner?
The same applies to suppliers. Can you extend payment terms for purchases with your suppliers? Improving payment terms on both fronts can significantly improve your business cash flow.
Tip 9 – Get the most out of your Xero dashboard
Xero has many features to help you track cash flow. The dashboard lets you see your financial position at a glance, and you can personalise it to suit your business requirements.
How can ABA help you improve your business cash flow?
At ABA Advice Beyond Accounting in Birtinya, we’re committed to helping you understand your numbers. We can help you work through business cash flow challenges in the business performance meetings included in your service package. Or, if you have a quick question, you can give us a call and we can help right away. Don’t waste any more time struggling with cash flow. Contact us today.