5 Ways to Manage Your Business Cash Flow This New Financial Year
Reading time: 8 minutes |Topic: Business Advisory
Let's be honest: the start of a new financial year should feel like a fresh start. But for many Australian small business owners heading into 2026–27, it feels anything but.
The cost of living crisis has not let up. Inflation re-accelerated to 4.2% by April 2026, well above the Reserve Bank's target and the RBA responded with back-to-back rate hikes, pushing the cash rate to 4.35% by June 2026. Energy bills surged after the federal Energy Bill Relief Fund expired on 31 December 2025 with no replacement. And now, on top of all of that, one of the most significant payroll changes in decades just took effect: Payday Super.
If you're feeling the squeeze, you're not alone. More than one in five Australian SMEs could struggle with cash flow pressure in the wake of the Payday Super reforms alone and that's before factoring in higher operating costs, rising wages, and cautious consumer spending.
The good news? Cash flow is manageable. It requires intention, the right systems, and ideally a good accountant in your corner. Here are five practical ways to take control of your business cash flow this new financial year.
1. Rebuild Your Cash Flow Forecast
If you haven't updated your cash flow forecast recently, now is the time; and the first thing to model is the impact of Payday Super.
From 1 July 2026, employers must pay superannuation contributions at the same time as wages or within seven business days of payday. This replaces the old quarterly system, and it's a fundamental shift in how cash leaves your business.
Previously, the gap between payroll and quarterly super payments acted as a short-term cash buffer for many SMEs. That buffer is now gone. Super leaves your account every single pay run – weekly, fortnightly, or monthly alongside wages. For a business with a $50,000 monthly payroll, that's an extra $6,000 in super that now moves with wages instead of sitting in your account for up to three months.
What to do:
Calculate your super obligation as a percentage of every pay run (12% of ordinary time earnings)
Update your cash flow forecast to reflect super going out with each payroll cycle
Build a cash reserve equal to at least one quarter's super obligations as a transition buffer
Ensure your payroll software is SuperStream-compliant, the ATO's Small Business Superannuation Clearing House (SBSCH) closed permanently on 1 July 2026
Pro tip: If Payday Super has created a short-term cash gap, talk to your bank about a business overdraft or line of credit to smooth the transition. It's far cheaper than ATO penalties for late super.
2. Get Serious About Accounts Receivable
In a tight economy, slow-paying clients can quietly sink an otherwise healthy business. When your customers are also feeling cost of living pressure, payment delays become more common and the ripple effect on your cash flow can be severe.
The single most effective thing you can do for your cash position is to get paid faster.
Practical steps:
Invoice immediately. Don't batch invoicing at the end of the week or month. Invoice the moment work is completed or delivered. Every day of delay is a day you're financing your client's business.
Chase overdue invoices systematically. Set automated reminders at 3 days before due, on the due date, and at 7, 14, and 30 days overdue. Don't wait and hope, the squeaky wheel gets paid.
Offer a small early payment incentive. A 1–2% discount for payment within 7 days can dramatically accelerate collections.
Consider invoice financing. If slow-paying clients are a chronic issue, invoice finance (also called debtor finance) lets you access up to 85% of the invoice value immediately, with the balance paid once your client pays.
Shorten your payment terms. If you're offering 30-day terms, try 14. Many clients will simply pay within whatever window you set
A single large outstanding invoice can distort your entire cash position. Stay on top of your receivables the same way the ATO stays on top of you.
3. Know Your Numbers: Profit ≠ Cash
This is one of the most important lessons in business, and one that catches even experienced owners off guard. A business can be profitable on paper and still run out of cash. These are two different things.
Profit is an accounting concept, it's revenue minus expenses, and it includes amounts you've invoiced but not yet received (under accrual accounting). Cash is reality, it's what's actually in your bank account.
The gap between the two is where businesses get into trouble, particularly when:
Revenue is growing but clients are slow to pay
You're paying suppliers before customers pay you
You've taken on new stock, equipment, or staff ahead of revenue coming in
GST collected from customers is sitting in your account but belongs to the ATO
What to do:
Run a monthly cash flow statement alongside your P&L
Keep a dedicated GST account. Every time you invoice with GST, transfer 1/11th of the invoice amount into a separate account reserved for the ATO. When your BAS is due, the money is already set aside.
Understand your cash conversion cycle – how many days between spending money and receiving it back. The shorter this cycle, the healthier your cash flow.
4. Reduce Costs Strategically
With inflation still elevated, most small businesses are facing higher operating expenses across the board. The instinct is to cut everything. The smarter approach is to cut strategically, protecting the spending that drives revenue while eliminating what doesn't.
Start with a cost audit:
Review every recurring subscription and software licence. Cancel anything not actively used.
Renegotiate supplier contracts, particularly insurance, telecommunications, and utilities. Loyalty rarely pays in these categories; comparison shopping does.
Look at staffing costs critically.
Also revisit your pricing. Many small business owners haven't raised prices in 12–18 months, even as their own costs have climbed. In an inflationary environment, holding prices while costs rise is a slow cash flow bleed. A modest, well-communicated price increase is often more effective than cutting costs and your loyal clients will usually accept it if you explain it honestly.
5.Build a Cash Reserve
The businesses that survive economic downturns and compliance shocks like Payday Super aren't necessarily the most profitable ones. They're the ones with cash reserves.
A cash buffer doesn't need to be large to be effective. Even one month of operating expenses set aside in a separate account can mean the difference between weathering a slow payment, an unexpected ATO bill, or a quiet trading period and going into crisis mode.
How to build it:
Set a target: 4–8 weeks of operating expenses is a practical starting point for most small businesses
Automate a small transfer each week or fortnight into a dedicated reserve account. Treat it like a non-negotiable expense.
Use high-interest business savings accounts or short-term term deposits to make the reserve work while it sits there
The Bigger Picture: What This Financial Year Demands
The 2026–27 financial year brings a genuinely challenging set of conditions for Australian small businesses. The cost of living crisis has squeezed both operating costs and customer spending. Interest rates remain elevated. Payday Super has permanently changed the timing of one of your biggest obligations. And the ATO's expanded compliance program means the risk of getting it wrong has never been higher.
But businesses that face these challenges proactively with accurate forecasts, tight receivables management, clear visibility of their numbers, disciplined cost management, and a cash buffer are well positioned to not just survive this environment, but come out of it stronger.
Cash flow problems don't usually arrive suddenly. They build slowly, invisibly, until they become a crisis.
Want help building a cash flow plan for the new financial year? Our team works with small business owners across Australia to get their numbers in order, prepare for compliance changes like Payday Super, and build businesses that are financially resilient.
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This article is intended as general information only and does not constitute financial or accounting advice. Always consult a registered accountant or financial adviser for advice specific to your circumstances.
