In your financial forecasts, you need to allow for the difference between revenue you have invoiced for and revenue you have received. Operationally, you need an active and tight escalation process to collect any money you’re owed. Together, accounts receivable and accounts payable drive the working capital needs of your business.Īs a simple example, if you send out invoices to customers and there are delays in receiving their payment, you can go broke much quicker than expected, despite being otherwise successful or profitable in theory. Accounts payable is the money you pay suppliers and creditors. If you’re accessing the R&D Tax Incentive, you’ll be forecasting to receive a refund from the ATOĪccounts receivable is the money you receive from customers or other people who pay you.If you’re making a profit, you need to plan for annual tax payments or quarterly PAYG instalments.PAYG (the taxes you withhold from your employees) is also payable in quarterly or monthly activity statements.Net GST is typically payable (or receivable) as part of your quarterly BAS Net GST that you collect from customers, less GST you pay to suppliers.If you’re big enough, you also have the joy of paying state-based payroll taxes.While you’re probably aware of most of these, ask any startup or SME owner about the ‘gotcha’ impact of these each quarter… so you want to make sure you’ve got these covered, in advance. If you are trying to predict future cash needs, especially as a startup or when juggling cash in growth periods, you’ll quickly realise the other elements that affect cash but are not well reflected in your P&L. “If you don’t understand (from your P&L) where your cash is going, the answer is on your balance sheet.” ![]() We have a saying that captures when it’s time to move beyond just your P&L and how much cash you have in the bank: Stepping up to the balance sheet and beyond
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