How to Survive a Cash Flow Shortage in Your Business

- mksgroup

Cash flow shortages are one of the most common and stressful challenges faced by Australian businesses.

And contrary to popular belief, they don’t just happen to struggling businesses.

We regularly see profitable businesses with strong sales still experiencing cash flow pressure due to timing mismatches, growth spurts, tax obligations, or poor visibility over future cash needs.

The good news?
Cash flow problems are usually fixable, if they’re addressed early and strategically.

Below are some practical strategies business owners can implement to stabilise cash flow and regain control.

1. Get Clear on Where the Cash Is Actually Going

Many business owners rely on their profit and loss report to assess performance, but profit does not equal cash.

Start with:

  • A 13-week rolling cash flow forecast
  • Visibility over:
    • When customers actually pay
    • Upcoming tax, superannuation and GST obligations
    • Loan repayments and fixed overheads

Without a forward-looking view, cash flow issues tend to appear suddenly, when it’s already too late to react calmly.

Tip: If you’re not forecasting cash weekly or monthly, you’re managing blind. You can also use tools build in your accounting software such as Xero to show you predictions on cashflow.

2. Improve Debtor Collection (Without Damaging Relationships)

Late-paying customers are one of the biggest contributors to cash flow strain.

Simple improvements can make a big difference:

  • Invoice immediately upon delivery (not at month-end)
  • Clearly state payment terms on every invoice
  • Follow up earlier, not after 30+ days
  • Consider progress billing or deposits for larger jobs

For many businesses, tightening debtor management can free up tens of thousands of dollars without increasing sales.

3. Sell or Rationalise Excess Assets

Many businesses hold assets that are no longer actively contributing to revenue but continue to drain cash.

This may include:

  • Vehicles or equipment that are underutilised
  • Plant or machinery purchased for past projects
  • Redundant technology or office fit-outs

Selling excess or non-core assets can:

  • Immediately release cash back into the business
  • Reduce loan repayments and interest costs
  • Lower insurance, registration and maintenance expenses

In some cases, simply right-sizing assets can significantly improve monthly cash flow without impacting operations.

4. Review Employee Capacity and Team Break-Even Points

Staff costs are often the largest fixed expense in a business, yet many owners don’t clearly understand the break-even point for their team.

Key questions to ask:

  • Is each team member operating at reasonable capacity?
  • What revenue is required per employee to cover wages, on-costs and overheads?
  • Are senior team members doing work that could be delegated more efficiently?

This is not about cutting staff indiscriminately.
It’s about ensuring:

  • Roles are aligned to revenue generation or operational efficiency
  • Work is priced appropriately for the time involved
  • The business structure supports sustainable profitability

Understanding your team’s true cost base gives you clarity and control, especially during tighter cash periods.

5. Review Expenses, Especially “Sticky” Costs

During cash shortages, businesses often cut obvious costs first, but miss the ones quietly draining cash each month.

Look closely at:

  • Software subscriptions
  • Underutilised contractors
  • Rent, vehicles, and finance agreements
  • Personal expenses running through the business

The goal isn’t just to cut costs, it’s to ensure every dollar spent is actually contributing to profitability or growth.

6. Manage Tax Before It Manages You

GST, PAYG, superannuation and income tax are some of the largest cash flow shocks for Australian businesses.

Common mistakes we see:

  • Using GST as working capital
  • Not planning for income tax on profitable years
  • Falling behind on superannuation

Proactive strategies may include:

  • Adjusting PAYG instalments
  • Setting aside tax weekly
  • Payment plans where appropriate
  • Structuring timing of income and expenses (legally)

Tax should be planned, not feared.

7. Fund Growth Properly (Don’t Let Success Sink You)

Ironically, growth is a major cause of cash flow shortages.

Hiring staff, buying stock, or expanding too quickly without funding can cripple an otherwise healthy business.

Options to explore:

  • Business overdrafts or working capital facilities
  • Invoice finance or debtor funding
  • Structuring loans correctly (short-term vs long-term use)
  • Aligning funding with the purpose of the expense

Growth should feel exciting, not suffocating.

8. Don’t Try to Solve Cash Flow Alone

Cash flow issues are rarely just accounting problems.
They’re usually a mix of pricing, structure, systems, and decision-making.

This is where advisory support makes a real difference.

An experienced business advisor can:

  • Identify the true cause of cash strain
  • Build realistic cash flow forecasts
  • Clarify break-even points and capacity issues
  • Create a clear, practical action plan
  • Help you make confident decisions under pressure

Need Help Getting Cash Flow Back Under Control?

If your business is experiencing cash flow pressure, or you want to prevent it before it starts, now is the time to act.

At MKS Group, we work closely with Melbourne business owners to:

  • Stabilise cash flow
  • Improve profitability
  • Plan for growth with confidence
  • Move from reactive to proactive financial management

📞 Reach out to our advisory team to book a confidential discussion about your business and explore practical solutions tailored to your situation.

Because cash flow stress shouldn’t be “part of running a business”.

Want to learn more about how we can help you with this topic? Get in touch today: hello@mksgroup.com.au


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