Cash-flow gap estimator

Why profitable businesses still run short of cash

Profit is a yearly story; cash is a weekly one. A business can finish the year comfortably ahead and still have six weeks where wages, rent and suppliers land before customers pay. Seasonal trade, a big customer on long payment terms, stock bought ahead of a busy period or a lump-sum tax bill are the usual culprits. The gap is temporary — but if you can't cover it, the consequences aren't.

How this estimator works it out

It takes your normal month and applies the slow patch you describe: takings fall by the percentage you choose, costs stay the same (because most of them do), and it repeats that for the number of slow months you set. Any one-off bill is added in the first slow month. Your usable cash is subtracted, and what's left is the gap you'd need to fund. The runway figure shows roughly how long your cash would last before you'd need help.

The bars show your running cash position across the slow months and two recovery months. Bars below the line are the months you'd be short.

Matching the gap to the right finance

• Small, repeating gaps suit a business line of credit or seasonal finance — draw what you need, repay in the good months.
• Gaps caused by slow-paying business customers suit invoice finance, which turns unpaid invoices into cash now.
• A one-off bill usually suits a short-term business loan with a clear end date — or, for tax, ATO debt funding.
• Big gaps are often cheapest to fund with property security, if there's equity available.

Before borrowing, it's worth squeezing the gap itself: tighter payment terms, deposits on big jobs, staggered supplier payments and a regular tax set-aside. Our guide to riding out a slow month has practical ideas. If you'd like a person to look at your numbers, start a 60-second enquiry.

Frequently asked questions

What is a cash-flow gap?

It's the stretch of time when money going out of the business is bigger than money coming in, and your cash in the bank can't cover the difference. Profitable businesses get them all the time — usually because of seasons, slow-paying customers or one big bill.

How accurate is this estimator?

It's as accurate as the numbers you put in, and it uses a simple model: an even slow patch followed by a return to normal. For a sharper picture, build a month-by-month forecast with your accountant and use this as the sense check.

Why doesn't it include loan repayments or interest?

Because pricing depends on your circumstances, and adding a made-up figure would make the result look more precise than it is. Use the result to understand the size and length of the gap, then talk to a specialist about how to fund it.

Which finance suits a short, repeating gap?

A business line of credit or seasonal finance usually suits gaps that come and go, because you draw only what you need and pay it back when trade picks up. One-off bills tend to suit a short-term loan with a clear end date.