At RJD Advisory, we regularly work with business owners who say:

“We’re making a profit… but there never seems to be enough money in the bank.”

If that sounds familiar, the good news is that there are practical, effective strategies you can implement right now. This article explains cash flow, introduces the cash conversion cycle, and shares seven simple ways to manage your cash position.

Why Cash Flow Matters

For small and medium-sized businesses, cash flow is often the difference between stability and struggle.

It’s not just about how much you earn—it’s about the timing of when money comes in and when it goes out.

• Positive cash flow = you have more money coming in than going out

• Negative cash flow = you’re spending more than you have on hand

Cash flow issues are one of the leading causes of business failure in Australia. But with the right processes, they can be prevented.

Understanding the Cash Conversion Cycle (CCC)

The Cash Conversion Cycle (CCC) measures how long it takes to convert your products or services into cash in the bank. The shorter the cycle, the faster you can reinvest, pay bills, and grow.

It’s made up of three parts:

• Days in Inventory (DI) – How long it takes to sell stock or complete work in progress.

• Debtor Days (DD) – How long it takes for customers to pay you.

• Creditor Days (CD) – How long you take to pay suppliers.

CCC = DI + DD – CD

• The lower the CCC, the faster your business generates usable cash.

7 Practical Ways to Improve Cash Flow

1. Invoice Promptly and Follow Up

Many businesses delay sending invoices—and then wait even longer to get paid. Speeding up your invoicing process improves cash flow immediately.

Best practice:

• Send invoices as soon as work is completed or on a set schedule (e.g. the 1st of each month for service businesses)

• Use automated reminders and enforce payment terms.

Result: Shortens debtor days and brings cash in faster

2. Review Your Payment Terms

If you usually offer 30-day terms, think about shortening them to 14 days. You might also ask for part-payment in advance.

Best practice:

• Introduce direct debit payments on the due date as a standard, non-negotiable term.

• Clearly communicate expectations from the outset.

Result: Improves cash flow consistency and reduces timing gaps.

3. Negotiate Supplier Terms

Paying suppliers faster than necessary can strain your cash flow.

Best practice:

• Negotiate longer payment terms.

• Take early payment discounts only when it’s beneficial.

• Build strong relationships with suppliers to maintain flexibility.

Result: Increases creditor days and helps to preserve working capital.

4. Manage Inventory or Work in Progress Efficiently

Holding too much stock—or carrying too much unbilled work—can tie up valuable cash.

Best practice:

• Clear out slow-moving stock.

• Use forecasting tools to optimise ordering.

• In service businesses, ensure work is invoiced as soon as it’s billable.

Result: Frees up working capital and reduces days in inventory.

5. Monitor Cash Flow Weekly, Not Monthly

A monthly review is often too slow to spot issues in time. Weekly tracking helps you stay ahead of shortfalls.

Best practice:

• Use a rolling 13-week cash flow forecast.

• Integrate forecasting into your broader budget process.

• Make data-driven decisions proactively, not reactively.

Result: Better visibility and faster course correction.

6. Cut Waste Without Cutting Value

Reducing expenses doesn’t mean slashing what matters. It means spending smarter.

Best practice:

• Audit recurring subscriptions and unnecessary overheads.

• Align spending with core business goals.

• Introduce an expense review process as part of budgeting.

Result: Protects profitability without sacrificing growth.

7. Engage a Virtual CFO

If you’re juggling cash flow, planning growth, or just feeling overwhelmed by the numbers—a Virtual CFO can help.

What we do:

• Build tailored financial forecasts.

• Monitor and improve cash flow health.

• Offer strategic advice grounded in your business goals.

Result: Transforms cash flow from a stressor into a strategic advantage.

Ready to Take Control of Your Cash Flow?

At RJD Advisory, we help small and medium-sized businesses in Australia. We make it easy for them to understand, manage, and improve their cash flow — without the stress.

🔹 We build clear financial forecasts.

🔹 We help to optimise working capital.

🔹 We help you boost your cash position—without cutting corners.

📞 Book a consultation today to see how we can help.