Cash flow. It’s the stuff that can keep business owners awake at night. The larger a business grows, the more stressful these challenges can become.  
We invited four fearless small business leaders to share their own cash flow insights. Together, they represent a range of industries and business models across the small business spectrum. By combining their anecdotal insights with Xero’s anonymised monthly data from hundreds of thousands of small businesses, we lift the lid on all things cash flow related.


Who’s who?

Meet the four founding members of Xero’s small business advisory panel.

Mandi Gunsberger, a high-profile digital media advisor, who successfully sold the nationwide digital publishing company Babyology.

James Begley, founder of Pickstar, the uber of sports celebrity speaker engagements.

Pippa Oostergetel of Squeak, a retail business specialising in digitally printed scarves, and recent recipient of Xero’s Cloud Street package.

Mark Lawry, a data-driven partner at Suntax accounting firm in Melbourne.


Firstly, do you know your business’s cash flow pattern?

Mandi, Founder and CEO of Babyology: Yes, we often have a good May, June and July. April is always a strong time of year for us and – since it can take us three months to get paid due to agency timelines – we know July will be a great month for cash flow. It can take a while to get over the Christmas hump every year so we may have to go into our personal savings to buffer this. But knowing that this is a typical pattern means we can be prepared.  

Pippa, CEO of Squeak: Being retail-based, my July EOFY sales always boost cash flow. Then things die off, and August and September go quiet. But with just me in the business, my cash flow seems to work out in the end. I can always invest my own money and pay myself back during high sales time like Christmas or June and July.

James, founder of Pickstar: July is always a good month for our cash flow and last July we doubled our best ever month from an invoicing point of view. Part of that is because, as an events business, we have established tight policies to bring in money prior to events to help our cash flow. That’s an important tip for any business to consider. Things quieten down for us at Christmas – July and August are always the pinnacle, and we plan for that.

How often do you look at the numbers to help support your own cash flow?

James of Pickstar: Every day. For me, the key is to understand the difference between invoicing and cash. I see invoicing as a forecast of what’s to come, and I use the cash summary report to give me a view of the here/tomorrow/next week. Sometimes in a small business, it’s not about what’s happening three months away, it’s about next week.

Mandi of Babyology: I agree – I look every single day. The numbers control everything we do in our business. When we were smaller, we had a very stable cash flow and would pay invoices the day they came in. But as a growing business with staff, you have to be much more strategic.

Pippa of Squeak: It’s such a good idea to track your data, as long as you take that one step further and develop conditions that help you. Like my wholesale orders. I haven’t ordered the stock yet – I’ll wait until I get a little bit of cash that’s coming down the line. It’s about creating rules and procedures for yourself to aid your cash flow initiatives.

Mark of Suntax: This is going to sound like a typical accounting answer but, for me, it’s all about using Xero’s dashboard. I set up a watch list for every client I have to track the amount of Super, GST and PAYG withholding that is payable. I can see the bank account balance, the invoices coming in, the bills that need to be paid, and when they’re due. I check this every day. A lot of business owners see money coming in and think they’re doing okay, but you have to address all the payables to truly know where you stand.

How does cash flow affect your business decisions?

Mandi of Babyology: Cash flow is everything. It can certainly be the difference between taking your business to the next level or not. Our end goal was always to sell the business – which we recently did. To achieve that we knew we needed to operate out of an office and have established processes that could work without us, so we worked toward that. But my advice would be, don’t rush into growth just because you think you should. Sometimes it’s just about making enough money to keep doing what you’re doing.  

James of Pickstar: I agree. The idea of growth is a common theme that comes with cash flow – but the ability to grow can be a real chasm for small businesses. The question becomes, do you make enough money to profit and be able to reinvest to grow your business? That was a big dilemma for us, and it’s the reason we sought out investment. Having a healthy cash flow is one thing – but you need a strong growth model to guide where that money gets used down the road.