How to bridge a cash flow gap in your business

Profit isn’t the same as cash

A business can be profitable and still run out of money. The profit and loss statement records income when it’s earned and costs when they’re incurred. The bank account records money when it actually moves. If you pay suppliers and staff before customers pay you, there’s a gap, and that gap is where many good businesses get into trouble.

Before you go looking for finance, it pays to understand the gap properly. Sometimes it’s smaller than it feels. Sometimes it’s bigger. Either way, knowing its shape tells you exactly what kind of help you need.

Step 1: Measure the gap with a 13-week forecast

A 13-week cash flow forecast is a simple table: weeks across the top, cash in and cash out down the side. business.gov.au has a free template linked below. Fill it in with:

• Cash in: expected customer payments (be realistic about who pays late), other income, GST refunds.
• Cash out: wages and super, suppliers, rent, loan repayments, BAS and PAYG, insurance, other bills.
• Opening balance: what’s in the account now.

The running balance shows you three things: when the gap opens, how deep it gets and when it closes. That’s the information every lender, and every sensible decision, depends on.

Step 2: Pull the free levers first

Before borrowing, see how much of the gap you can close yourself.

Lever	What to do
Collections	Chase every overdue invoice this week. Call, don’t just email.
Invoicing	Invoice the day work is finished, not at month end.
Terms	Shorten your payment terms for new customers; ask for deposits on big jobs.
Suppliers	Ask key suppliers for longer terms or a staged payment.
Stock	Clear slow-moving stock, even at a small discount.
Spending	Delay non-essential purchases until after the gap closes.
Creditors	Talk early to anyone you might pay late. Surprises damage trust; conversations build it.

Re-run the forecast after pulling these levers. Often the gap shrinks by more than owners expect.

Step 3: Deal with the tax side properly

Tax is a common pressure point. BAS, PAYG withholding and super all land at fixed times, and since Payday Super started on 1 July 2026, super now moves with every payday rather than quarterly.

Always lodge on time, even if you can’t pay in full. If you need time, the ATO’s payment plan options are worth checking: businesses owing $200,000 or less can often set one up online. Keep in mind that general interest charge incurred from 1 July 2025 is no longer tax deductible, so a long-running ATO balance costs more than it used to. If the tax position is a major part of the gap, read ATO debt loans.

Step 4: Match the facility to the gap’s shape

Whatever’s left after the free levers, choose finance that fits the shape of the gap:

Gap shape	Best fit
Repeats every month	Business line of credit
Caused by slow-paying business customers	Invoice finance or debtor finance
One-off, closes within months	Short-term business loan
Seasonal	Seasonal business loan
Large, with property available	Short-term property-secured loan
Wages before payment	Payroll funding

The wrong shape costs money. A lump-sum loan for a recurring gap means paying interest on money that sits idle half the month. A revolving facility for a one-off need may come with ongoing fees you don’t need.

If you’d like help reading your forecast and picking the right shape, you can send us an enquiry at any point in this process.

Step 5: Size it from the forecast

Your forecast tells you the deepest point of the gap. Size the facility to that point, plus a buffer of a few weeks’ costs. Then check repayments against the forecast too: they should fit comfortably in the weeks after the gap closes.

Step 6: Fix the cause

A one-off gap is just timing. A gap that keeps returning is a signal. Common causes:

• Pricing that doesn’t cover the true cost of the work.
• Payment terms that are longer than your costs allow.
• Growth that’s faster than your working capital.
• One big customer who pays slowly and dominates your ledger.
• Stock that sits too long.

Talk to your accountant about the cause, not just the symptom. Finance can carry you while you fix it, but it shouldn’t become a permanent crutch.

An illustrative example

A florist’s forecast shows a gap opening in late January, after the Christmas rush, deepening through February and closing in the lead-up to Valentine’s Day and Mother’s Day. Chasing two overdue corporate invoices and agreeing longer terms with the main grower closes half of it. A modest line of credit, drawn in February and repaid by May, covers the rest. (Illustrative only.)

Warning signs to act on now

• You’re regularly paying bills late.
• You’re using the ATO as an informal lender.
• You’re borrowing to make repayments on other loans.
• Your forecast shows the gap getting deeper every month.

If any of these apply, get advice from your accountant. business.gov.au also has resources on managing business debt.

Building your 13-week forecast: a worked layout

If you’ve never built a forecast, start with this simple layout and fill it in from your accounting software and bank statements.

Row	What goes in it
Opening cash	Balance at the start of the week
Customer receipts	Only what you genuinely expect to arrive that week
Other receipts	GST refunds, asset sales, owner contributions
Wages and super	Every payday, now with super alongside
Suppliers	By due date, not invoice date
Rent, insurance, subscriptions	Fixed commitments
Loan repayments	Every existing facility
BAS and PAYG	On their due dates
Closing cash	Opening plus receipts minus payments

Three habits make forecasts useful rather than decorative. First, be pessimistic about receipts: if a customer usually pays ten days late, forecast it ten days late. Second, update it every week, replacing forecast figures with actuals. Third, look at the lowest closing balance across all thirteen weeks — that single number, plus a buffer, is the size of the facility you may need.

Once a forecast exists, conversations with lenders, suppliers and the ATO change. Instead of saying “things are tight”, you can say exactly when the gap opens, how deep it gets and when it closes. That precision builds confidence and usually leads to better outcomes on every front. Keep a copy of each week’s version too, so you can see how accurate your predictions were and improve them over time.

Close the gap, keep the business moving

Once you know the size and shape of your gap, finding the right facility is much simpler. The enquiry takes about 60 seconds, there’s no credit check when you enquire, and it’s read by a specialist who works on it personally rather than spreading it to a list of lenders.

Tell us how deep the gap is, when it closes and what’s causing it. Accurate details mean we can match the shape first time. Start your enquiry.