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Your Top Cash Flow Questions Answered



Your Top Cash Flow Questions Answered

Cash flow is the beating heart of business.

A healthy cash flow circulates enough money to pay bills, compensate staff, fulfill invoices, and invest in future growth. Cash flow is critical to business success; lack of cash flow is one of the main reasons 50% of Australian SMEs go out of operation in the first three years. Without it, a business is likely to end up on the wrong side of the statistic. 

Yet while owners are growing increasingly aware that reliable access to available funds is the key to a successful business, 46% of small businesses remain cash flow negative — meaning more money is flowing out the door than coming in. 

Keep reading to understand the basics of cash flow, cash flow management and tips to improve your own business’s cash flow.

What is cash flow?

The term “cash flow” refers to the net money going in and out of your business. Ideally, it should be positive — as this gives you more room to pay bills, staff and invoices without seeking loans, adding further interest to your outflow. For this reason, a business’s ability to manage its cash flow typically determines its likelihood of success.

What causes a negative cash flow?

A big contributor to poor cash flow is late payments — when customers don’t pay their invoices in time, it inhibits your ability to invest, grow and employ. However, a more unsuspecting contributor to poor cash flow is slow access to the money your customers pay for your products or services. 

A delay in accessing your funds is usually a result of mixing and matching your EFTPOS provider and bank, creating a costly lag after every purchase. This delay can eventually lead businesses into a debt trap, as they’re forced to take out loans to ensure access to cash. 

What is sales revenue vs cash flow?

Sales revenue is the amount of money earned from the sale of a business's goods or services. For example, when a bookstore sells a book for $45, this entire figure counts towards the store’s sales revenue. It is the total, gross amount of money coming into the business through sales.

Cash flow, on the other hand, refers to the money going in and out of a business. It includes money that flows into the business in other ways, beyond sales. For this reason, sales revenue is an indicator of sales and marketing success, while the latter refers to a business's overall health because it indicates liquidity.

Sales revenue and cash flow are both important figures to track; without them, it’s impossible to gauge the success of a business and make informed decisions. 

What is break-even point and how is it calculated?

The point where your business breaks even is when your profit is zero and your cash flow is neutral. This means your sales revenue covers all of your outgoing expenses and your business can stay afloat without being propped up by cash loans. It’s from this point that a profit can start being made.

There’s a simple formula you can use to calculate your business’ approximate break-even point — this will tell you the minimum number of sales your business needs to make to avoid a negative cash flow.


Calculating your break-even point is also a useful way to understand the timing between getting paid and paying your own bills. You don’t want to be taking out a cash loan in order to pay suppliers and staff salaries purely because your funds are yet to be processed. For this reason, quick access to your takings is key.  

How to improve cash flow from operations?

There are a number of ways you can feed your cash flow and maximise your liquidity.

Take on-the-spot payments

Service businesses often bear the brunt of delayed payments because they don’t have the ability to accept payment upon completion of a job, putting them at the behest of the customer — which automatically delays the inflow of revenue. A mobile EFTPOS terminal that allows you to take payments on the spot will help bridge that gap, meaning you don’t have to return to the office to invoice a customer — then chase up late payments.  

Add a surcharge

Another way you can instantly up your cash flow is to pass your transaction fees to your customers via a surcharge. If you use the Zeller Terminal, this is something you can opt to do with every transaction — giving you access to more funds that you can then invest into advertising, product improvements or lower prices.

Offer more ways to pay

Something as simple as accepting new payment methods as they grow in popularity can open you up to a wealth of new customers. Plus, you won’t be reliant on a single source of funds throughout the month, minimising the risk of extended cashless periods. The Zeller Terminal allows you to accept payments via contactless devices and cards, chip and magstripe cards, and QR codes. Plus, you only pay a flat, low fee of just 1.4% per tapped, dipped or swiped transaction for every card type.

How to manage personal cash flow?

A good way of managing your business’s cash flow is by first mastering your personal cash flow. This means understanding your monthly earnings, setting realistic goals, budgeting for adequate spending, setting up auto-payments around payday, having emergency funds in place for unforeseen expenses, and siphoning off your surplus into a savings account.

What's the easiest way to speed up cash flow?

Achieving a positive cash flow is an integral step on the way to business success. Choosing a comprehensive payments solution like Zeller can help get you there. 

Access to cash will come sooner thanks to seamless connectivity between your EFTPOS Terminal, merchant account and business Mastercard. Plus, it all comes in the one box. Improving your cash flow couldn’t be more simple.


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