By Zilla Efrat

Starting a new financial year with a healthy cash position is vital to ensuring the continued success of your business.  

It’s also more important than ever given the current environment of high interest rates, inflation and volatile operating conditions. 

Tax considerations

As the end of the financial year (EOFY) fast approaches, cash flow can become a hot topic when considering some tax-related factors. 

Firstly, you may need to plan for any additional GST and other taxes you may have to pay in the new year.  

Secondly, you might need cash or finance to benefit from available tax breaks.  

For example, the instant asset write-off threshold has been temporarily increased until 30 June 2024, allowing eligible businesses to immediately deduct the full cost of selected assets costing less than $20,000 if they are used or installed by that date. 

To improve your tax position, you may also want to pre-pay some of the next financial year’s expenses in this financial year or recover unpaid invoices from customers in the next financial year.  

Take control

If like many other businesses, delaying the receipt of payments from customers is not an option, now is the time to chase late and outstanding payments to improve your EOFY cash flow.  

You could consider offering rewards or discounts for early settlement of invoices by clients.  

In addition, you could boost your cash flow by making good use of your suppliers’ payment terms or by turning slow-moving or obsolete stock into cash, for example, through an EOFY sale. Carefully monitoring your debt levels and expenses will also help.  

The EOFY is also the ideal time to draw up a cash flow forecast for the 12 months ahead and identify what cash flow challenges lie ahead.  

Planning for cash flow problems can help you cushion or even avoid financial knocks to your business. It will assist you in overcoming periods when revenue dips or expenses are high. It will also enable you to invest in the growth of your business. Remember, having cash reserves will help you navigate unexpected negative events. 

Tapping into outside finance

Using business finance is a viable way to ensure you start the new financial year with a strong cash flow. 

In addition to traditional business loans, there are several more tailored options available. 

For example, asset finance will help you acquire any assets you need for your ongoing operations or growth without you having to incur a large upfront cost.  

Invoice finance, meanwhile, will allow you to continue trading successfully without having to wait for payments from customers. And trade finance is available for businesses trading with overseas partners. 

Contact us for tailored funding solutions for your business.