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Important

Rule number one is simple: Cash is king. If you can manage cash flow, you can do almost anything. If you cannot manage cash flow, even good businesses strike trouble.

Hi guys. I am back this week, and over the next few weeks, I am going to run through what I call TC’s Rules of Business.

These are the rules I have seen work over the last almost 30 years, running my own business and working with clients who are in business.

Rule number one is simple:

CASH IS KING.

Not the folding stuff. I mean your cash flow.

If you can manage cash flow, you can do almost anything.

If you cannot manage cash flow, even good businesses strike trouble.

Because working capital does not care how good your product is. Bills still land. Wages still land. Suppliers still land.

So let us talk about the levers that actually move the needle.

1. Invoicing (No Invoice = No Chance of Being Paid)

This is the most basic thing ever… and it gets missed more than you would think.

All too often, invoicing becomes an admin task at the end of the day — after you have been on the tools, after you have been in meetings, after you have been putting out fires.

So it gets delayed.

If you do not raise an invoice, you have no chance of being paid.

Practical move: Raise invoices as soon as the job is done, or bill by clear milestones.

2. Debtors (Awkward. Vital.)

Debtors’ collections are not fun. But it is one of the most important jobs in your business.

It comes down to one word: COMMUNICATION.

If someone is behind:

• Pick up the phone.
• Work out where they are at.
• Do not hide behind emails and hope it sorts itself out.

If they are genuinely under pressure:

• Set a payment plan.
• Even small periodic payments are better than silence.

If they are a repeat offender:

• Invoice more frequently.
• Or get a deposit up front.

The goal is simple: Shorten the time between doing the work and getting the cash into your bank account.

3. Stock and Work in Progress

If you sell products, stock is cash sitting on a shelf.

If you sell services, work in progress is the same thing. You have paid wages, you have paid the suppliers… but you have not raised an invoice yet.

That time lag is a cash flow killer.

Practical moves:

• Stock: Consider ordering smaller quantities, even if the unit price is higher, because the cash is freed up sooner.
• WIP: Bill by stage. Bill more frequently. Move it from WIP to sales as quickly as possible. Do not let paid work sit there unbilled.

4. Trade Creditors (Get on the Front Foot)

Now flip it around.

Trade creditors are money going out to your suppliers.

If you can see a bottleneck coming in three months:

• Do not wait for the supplier to call you.
• If they are calling you, you are already on the back foot.

Get on the phone early. No one needs BS. They just want facts and a plan.

• Can you pay it over three months?
• Can you set up a plan that is realistic?

Communication early buys you options.

5. Seasonality (Build the War Chest Early)

Then there is seasonality.

Sometimes it is your industry — ice cream in winter, for example.

Sometimes it is just Australia — Christmas hits, and whole industries slow down for weeks. In some sectors, it does not properly fire up again until after Australia Day.

Now is the time. Not December.

Work out what you need to cover:

• wages
• leave and public holidays
• overheads

And the reality is that invoicing and collections can slow down.

Then build a war chest progressively. Little bits, consistently, well before the pinch point arrives.

Overheads and Shiny Objects

Cash flow management also comes down to watching your spending.

Periodically review overheads:

• Subscriptions
• Software
• Insurances
• Vehicles
• Equipment

Ask the blunt question: Do I actually need to be paying this?

And if you are thinking about financing something shiny — pause.

Do you need it now, or can it wait six to twelve months?

Do not blaze away and walk out of the showroom with a shiny new Ranger because someone tells you it is “all deductible”.

Spend because it helps the business. Not because it gives you a tax deduction. A deduction does not make a bad spend a good idea. You are still out of pocket.

Keep an eye on ATO debts as well. They can quietly snowball if you stop looking.

The Hard Truth

I have seen good businesses go out backwards, not because they were not good at what they did… but because cash flow was not managed.

Running week to week is exhausting. Playing catch-up can take months, sometimes years.

You want to get on the front of the wave.

Call to Action (Weekly Cash Check)

Here is the practical takeaway.

Once a week, at the outside, do a quick cash check. Look at:

1. Bank accounts — What is the actual position?
2. Debtors — What is overdue? Who are you calling this week?
3. Creditors — What is due? What needs managing before it becomes a problem?
4. Upcoming payments — What is landing soon: wages, super, BAS, rent, loan payments, big supplier invoices?

This weekly habit is what keeps you in control.

Cash is king. Guard your war chest like it is the last dollars you have.

That is TC’s Rule of Business, number one.

Disclaimer: This article provides general information only and does not take into account your personal circumstances. It is not financial or tax advice. You should seek independent advice from a qualified professional before making decisions about tax, legal or financial planning matters, along with loan structures or entity structure.