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Understanding your cash position

1-minute read

A healthy cash flow is the lifeline of your business. Get the balance of in- and outgoings right, and it’s likely to flourish. Get it wrong, and your business may falter.

Knowing your cash position can help you understand whether your business is on the right track. Learn more in part two of our cash flow video series.

Key take-outs
  • Cash inflows describes all money coming into your business.
  • Cash outflows consist of all business expenses..
  • Your cash position can be calculated by subtracting your outflows from your inflows.

To understand your cash position, you’ll need to calculate your cash inflows minus your cash outflows. Here’s how you get there.

Firstly, cash inflows are all the forms of money coming into your business. These can be payments from customers, interest earned, or government grants.

On the other side of this equation are your cash outflows. These are all the streams taking money out of your business. For example, paying suppliers, covering expenses like rent or wages and paying off loans – with interest. Your cash outflows also include periodic payments like insurance, tax, and GST.

By subtracting your outflows from your inflows, your cash position will be either positive, negative, or neutral.


It’s important to remember this is not an indication of the success or potential profitability of your business. Your cash position simply shows where the money is, and if you have any gaps to cover.

Read more

How to create a cash budget

Your business will always need cash to grow. Here’s a guide to producing a cash budget that could help you keep track of your cash flow and plan for the unexpected.

Options to cover cash shortfalls

When you’re planning to achieve positive cash flow, it’s worth factoring in how to allow for unexpected expenses and seasonal downturns in income.

Improving your working capital cycle

What is working capital, and how does it affect cash flow? Check out these tips on how you could get your assets working harder for your business.

Things you should know

This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business.