Cash Flow Masterclass 2.2

How To Improve Cash Flow And Ways To Bridge Financing Gaps

• Learn how to calculate your true financing gap so you know exactly where you stand.
• Explore practical strategies like early payments, staged invoices and supplier negotiations to ease pressure.
• Build a small reserve fund to create breathing space and reduce stress. 

Taking the stress out of improving cash flow can be as easy as four simple steps.

When you’re running a business, money can have a way of disappearing faster than it arrives. That shortfall between what you have and what you need? That’s your financing gap but the good news is there are smart ways to cover it, says Tess McCormack – from CommBank Business Bank – who first recommends doing an audit of your supplier terms to see if there are any opportunities to make tweaks for better cash flow.

Take time to create a solid cash-flow forecast, which will highlight the difference between expected income and outgoings. This means undertaking a quick audit and factoring in wages, supplier invoices, rent and tax obligations to understand your true financial position.

Here are some cash-flow finance tips that can help. 

Early payment strategies can speed up cash in

One of the simplest ways to shrink cash flow gaps is to bring money in faster. McCormack recommends invoicing promptly, requesting staged payments with a deposit up front or offering small discounts for early payments. “A discount for paying faster is really appealing to lots of customers – particularly in the current environment.” 

Slow down cash out and shrink cash-flow gaps

At the same time, negotiate with suppliers about longer terms. “People in their personal lives like to pay every bill as it comes in but in business, you want to extend that time so you’ve got your cash for a little longer before you’re paying out,” says McCormack. 

Build savings to create a buffer

It may feel impossible when margins are tight but setting aside a little money each week into a separate account – enough to cover at least three months’ worth of business expenses during leaner times – will build resilience. McCormack suggests using the buying power of rewards and loyalty programs to access cashback. “CommBank Yello for Business is a great example, with plenty of discounts to be had.” 

Consider cash-flow finance solutions

Short-term gaps are normal but in some cases – where good forecasting and cash reserves aren’t quite touching the sides – it could be time to look at tools like an overdraft or a short-term loan. “They’re things that work in the right scenario if there’s a finance gap for a really good reason but you should review your own circumstances to determine if this is the right solution for you.”

Finally, remember that bridging a financing gap isn’t just about the numbers but about control. By knowing your true position and setting up small safeguards, you’ll feel less reactive and more ready to say yes to opportunities when they come knocking. 

Disclaimer: The information on this page is solely for educational purposes. It has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances and if necessary seek the appropriate professional advice. Any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of publication, but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made. CommBank Yello for Business is available to selected business customers who meet certain eligibility criteria. A customer who meets the eligibility criteria but who has not been selected to participate in CommBank Yello for Business, will not be able to access the program. For more information on eligibility, refer to the CommBank Yello for Business Terms and Conditions. The CommBank app is free to download however your mobile network provider charges you for accessing data on your phone. The CommBank app is available on Android and iOS operating systems (minimum operating system version requirements may apply). Learn more at commbank.com.au/app. Commonwealth Bank of Australia ABN 48 123 123 124. AFSL and Australian Credit Licence 234945.