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Is Cash King?

Ever wanted to know how to get a small business owner to squirm? Ask them how their cash flow is going, the response will be like seeing someone leave the dentist after three fillings!

Their mouth feels like it has three golf balls shoved in it and it’s simply pain, pain and more pain. For small business owners, start-ups in particular, it is tough – you go to the banks in Australia and say “Hi, I’m starting a small business…”

The response...

“Do you have any equity in your home? Have you previously run any successful small businesses? Do you have a successful two year track record, backed up with financials, Profit & Loss Statements and Notice of Assessments?”

You say: “Look, I have worked in the corporate world and I have had enough. I have some ideas and, in my opinion, I have a way to make some money. So what I am asking is for some unsecured funding!”
Bank: “Oh I am sorry, but we need two years cash flow positive financials and then we will average the numbers out and it goes to the business banking division and their criteria is very different to residential lending!” WHACK … Ok so, what do you need to know as a small business owner looking for cash? Well, without equity in your home you are already climbing a mountain, but the big issue is that banks in Australia will also not recognise those who have already ‘failed’. Ever heard this? “Oh, you want some money for your fabric business, but when you tried three years ago you did not make any money? Sorry.”

Why doesn’t our country take a leaf out of Silicon Valley? There, the first thing venture capitalists are asked is, “Oh, you failed in your last two businesses that didn’t get off the ground. You know what we think you can make it this time, so here is $250,000.”


It is amazing how different and conservative our banking system is. This means we need to look at other financial options to get a business off the ground – and not just off the ground but off the ground and up and running! However, when it comes down to it, we live in Australia and we play footy on the field where the ball lives; we are not in Silicon Valley so we play within our rules.  On top of that, during the GFC we were heavily cushioned by not having banks fail, so I am not complaining. I am just saying that if Australian small businesses represents 25% of the country’s employees, then we need some things to change.

In Australia you have probably heard this statistic: in their first 3 years, 70% of businesses that go bust are still profitable, but have just ran out of cash.  From a cash flow perspective, business owners get to a point where cash becomes like a pimple you can’t squeeze, if you do there is nothing left!  Sorry if you’re reading this over lunch, but you know what I mean!

Coffee in the Antarctic

You have to be tight! But to grow and get cash out of customers, sometimes you feel like it’s easier to get a hot coffee in the Antarctic. So here’s a few tips for managing cash flow:

  1. Invoice fast after the work is done and make sure to make the follow-up phone call about 14 days later – depending on your client you could push it out to 180 days or more in manufacturing (however, get a deposit and see if you can get a fixed amount paid monthly.)
  2. Make it tap and go – so get cash easy – make it as easy as possible for your customers to pay you. Always quote your bank account number on your invoices and ask for direct credits or automated payments.
  3. Cash management is all about managing your cash flow by understanding how a business works (in particular your suppliers). Consider that the businesses you rely on for your goods/services could be start-ups or new businesses that are not used to payment deadlines.

Learn more in Cash Flow Management: Why Is It Crucial for Business Success?

Small business loans can be an effective way to help you manage cash flow. Learn more about unsecured small business loans from Moula.


Business content for Australian SMEs. Sharing guides, growth hacks, and expert tips on finance, sales and marketing, and tech.

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