Streamlining your cash flow before EOFY

Streamlining your cash flow before EOFY

As the end of the financial year approaches, ensuring your business starts the new year on solid financial footing is crucial. Here are key factors and strategies to consider for managing cash flow effectively and preparing for the new financial year:


Tax Considerations

Plan for Additional Taxes: Prepare for any GST or other taxes due in the new financial year. Budgeting for these payments ensures you don’t face unexpected cash flow gaps.


Leverage Tax Breaks: Take advantage of available tax deductions and incentives before the end of the financial year. For instance, consider utilizing the temporary increase in the instant asset write-off threshold by purchasing eligible assets before 30 June 2024.


Pre-pay Expenses: Where feasible, pre-pay expenses for the next financial year to reduce taxable income in the current year and improve your cash flow position.


Recover Unpaid Invoices: Chase outstanding invoices to bring in cash before EOFY. Consider offering incentives like discounts for early payments to accelerate collections.


Cash Flow Management

Debt Management: Monitor and manage your accounts receivable closely. Actively pursue late payments to improve cash flow. Consider tightening credit terms or offering incentives for quicker payments.


Inventory Management: Evaluate your inventory levels and identify slow-moving or obsolete stock that can be sold off, potentially through an EOFY sale, to free up cash.


Expense Control: Review your expenses and identify areas where costs can be trimmed or optimized. Negotiate better terms with suppliers or vendors to improve cash flow.


Cash Flow Forecasting: Develop a detailed cash flow forecast for the upcoming year. Anticipate periods of high expenses or low revenue and plan accordingly. This will help you proactively manage cash reserves and navigate potential challenges.


Outside Finance Options

Asset Finance: Consider asset finance to acquire necessary equipment or assets without significant upfront costs. This can help preserve cash while allowing you to invest in business growth.


Invoice Finance: Utilize invoice finance to convert outstanding invoices into immediate cash flow. This can provide liquidity without waiting for customers to pay their invoices.


Trade Finance: If your business deals internationally, explore trade finance options to facilitate smoother transactions and manage currency fluctuations.


Planning for Growth and Resilience

Cash Reserves: Maintain adequate cash reserves to buffer against unexpected financial setbacks or opportunities. Having reserves allows you to weather downturns in revenue or unexpected expenses.


Strategic Investments: Allocate funds for strategic investments in business growth initiatives. Whether it’s expanding operations, marketing efforts, or upgrading technology, these investments can drive future profitability.


Risk Management: Assess and mitigate risks that could impact cash flow, such as economic downturns, changes in market conditions, or disruptions in supply chains.


By focusing on these strategies and considerations, you can optimize cash flow management as you approach the end of the financial year and position your business for a successful start to the new financial year. Planning ahead and leveraging finance options wisely will help you maintain financial stability and support sustainable growth.