Your business is sailing along nicely with a healthy bank balance, good sales, strong profits and your future opportunities look great.

Then a few bills come in, you pay the BAS, a supplier offers you a discount for paying cash up front and you take it, you buy some new laptops and even take a holiday.   Suddenly, your cash balance is very low, and you have gone from a healthy cash position to almost zero.

Who took my cash?  You did!  And you didn’t even know it!

Many business owners do a quick cash check based on their daily bank balance and look at any key payments to be made such as payroll or a large supplier’s invoices. But, they fail to keep an updated cash flow forecast in the background.  It is amazing how the small, and not so small, bills quietly eat away at your cash balance.  By keeping a simple cash flow forecast current, many businesses can avoid the sinking feeling that sets in when they realise they don’t have enough cash to meet their obligations.

The consequence of this is that the business owner then becomes frantic, trying to push payments out with suppliers, contacting the tax office to ask for extensions for payments, and maybe struggling to pay the rent. Suppliers that once provided generous payment terms want cash up front so your cash position worsens even further.   All because you felt there wasn’t a need to monitor cash flow.

Many business owners might be put off at the thought of setting up a cash flow for a variety of reasons.  You may be too busy, have plenty of cash right now, or as a lot of my clients have said, they just don’t know how to set up a cash flow system.

By having a cash flow system, you can look into the future and identify what your cash needs will be for any seasonal highs or lows of the business. Most importantly, you can prepare for “what if situations” such as:

What if you lose a major supplier or customer, how will that impact your business?

You can make your cash flow as simple or as complex as you want.  You simply start with what your sales will be each week or month (you need to have a sales forecast) and take away your ongoing cash out expenses.  This includes your cost of goods, wages, rent, marketing, travel, lease payments, etc.  This might all sound a bit complicated but once it is set up it becomes quite easy to manage.

If you are unsure, talk to your accountant or feel free to email me with any questions at

Once you have set up your cash flow, you will never ask “Who took my cash?” again!