Revenue is up, so why is cash tight?

It is a common and frustrating situation: sales are growing, but there is never enough in the bank. Usually one or more of these is behind it.

You may have done the work and issued the invoice, but the cash has not arrived. Growth makes this worse because more is owed to you at any one time.

Money spent on materials, inventory or unbilled work is cash that is out of the bank but not yet earned.

If costs have risen faster than prices, each extra dollar of sales brings in less profit than it used to.

GST and provisional tax payments can be large and fall due at set dates. Without a forecast, they can come as a surprise.

Owner drawings and debt repayments come out of cash, not out of profit, so they can take more than the business generates.

Build a simple 13-week cash flow forecast, review debtors weekly, check margins by job or product, and set aside tax regularly.

If you would like a structured business profitability review, Ridgeline Advisory can help you understand where profit and cash are going.

You may also find our Business Advisory page useful for understanding how Eastmure works alongside advisory partners to support your business.

Need help with your accounts or tax? Contact Eastmure & Associates.