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On a small screen, scroll the table sideways to see every column.
| Cause of the gap | Options to compare | Evidence that matters |
|---|---|---|
| Customers pay after you pay suppliers | Invoice finance or a revolving facility | Collectable invoices, payment history and timing. |
| Seasonal stock purchase | A term loan or line of credit | Stock plan, sales assumptions and the cash collection period. |
| A single unexpected expense | Cash reserves, supplier terms or a short loan | A repayment source after the expense is paid. |
| Recurring operating losses | A business and debt review first | What changes will restore positive cash flow? |
Start with a cash calendar
Accounting working capital is commonly described as current assets less current liabilities. For a borrowing decision, timing is more useful than the balance-sheet total: stock and receivables may not be available to pay next week's wages.
Map expected receipts and payments over the period the borrowing must cover. Use collection dates, allow for tax and existing loan deductions, and explain seasonal variations. The largest cash shortfall helps identify the required amount.
Profit, stock and unpaid invoices are different from available cash
A sale may appear in the accounts before the customer pays. Stock may have a resale value but still be on the shelf when wages are due. That is why a growing business can be profitable and short of cash at the same time: more orders can require more spending before the extra revenue is collected.
Trace one ordinary order through the business. Record the supplier deposit, delivery payment, storage or production costs, dispatch and customer collection date. Then identify which payments overlap across several orders. Financing one purchase in isolation can understate the amount needed when the next order starts before the first is paid.
A cash forecast should show opening cash, receipts, payments and the resulting closing balance for each period. Carry each closing balance into the next period. business.gov.au provides a cash-flow statement and forecasting guide for this purpose (checked 5 October 2026). Use the periods that reveal your shortfalls; weekly detail can be more useful than monthly totals when debit dates are tight.
Calculate the gap before choosing the buffer
For illustration, assume $8,000 opening cash, $10,000 of reliable receipts and $32,000 of payments before the next collection. The immediate shortfall is $14,000. If one $5,000 receipt is delayed beyond that period, it becomes $19,000. That is a specific reason for considering additional headroom, rather than choosing an arbitrary percentage of turnover.
Include the new loan's repayments in a second version of the forecast. Borrowing changes the cash position both when funds arrive and when deductions begin. An apparent $14,000 operating gap may require a different amount or product once those repayments are included.
Choose the structure after the purpose
A term loan can suit a single, defined requirement. A line of credit or overdraft may suit repeated gaps, subject to ongoing fees and access conditions. Invoice finance links funding to eligible receivables and needs a closer look at customer quality, disputes and recourse.
Also compare actions that reduce the gap: collecting overdue invoices, changing customer deposits, negotiating supplier terms or reducing slow-moving stock. These can reduce the amount borrowed without removing useful trading capacity.
Follow the cash all the way back to the account
Suppose stock costs $30,000, takes six weeks to sell and customers pay a month after delivery. The cash is committed for roughly ten weeks, before allowing for delays. A six-week loan would start running out before the trading cycle finishes.
Now put the loan's first repayment into that timeline. Even a profitable order can cause trouble if weekly deductions begin before customers pay. Use cash already available or other reliable receipts to explain how those early payments are covered.
Then test slower stock sales and a late customer. This example is illustrative; use your own margin, payment terms and costs. The amount invoiced is not all available for debt repayment once wages, tax and the next stock purchase are due.
Compare borrowing with changing the trading terms
Ask whether a customer deposit, earlier invoicing, staged payments or different supplier terms can shorten the period you fund. The answer depends on commercial relationships and bargaining power; do not count on a customer agreeing until it is confirmed. A supplier discount for early payment is worth comparing with the finance cost required to obtain it.
For illustration, a $600 discount on a stock order does not justify borrowing that costs $900 over the relevant period, unless another separately assessed benefit changes the case. Equally, delaying payment may carry a cost or threaten supply. Put the actual alternatives beside one another instead of treating “avoid debt” as a cost-free option.
Show the lender the working-capital cycle
Bring bank activity, debtor and creditor information, stock records where relevant, existing commitments and the forecast. Explain large customer concentrations and invoices already overdue. If the requirement is seasonal, show both the build-up and the period in which the balance should reduce.
After funding, compare actual receipts with the forecast regularly. A cash gap that keeps getting longer needs action while headroom remains. Contact the lender about material changes and review customer collections, stock and costs. Waiting until the facility is exhausted makes a manageable timing problem harder to address.
What a useful quote should show
Request the net advance, all fees, scheduled payments, security and guarantees, and the early payout amount. For a revolving facility, include the cost of an unused limit and the review conditions. Compare dollar cost over the expected period of use.
Size the facility around the peak cash gap and a reasoned buffer. If the forecast only balances after adding another loan, revisit collections, stock, pricing and expenses before increasing the debt.
Put a working-capital quote in context
For context, the RBA reports 7.23% p.a. for new small-business loans in August 2026. This is an average across different loan types, not a quote for this product or a rate every borrower can obtain. See how to compare business loan rates and use your written offer for the repayment calculation. Source checked 10 October 2026.
Three products to test against the cash calendar
Selected product examples checked on 10 October 2026. The useful comparison is how each one deals with the timing of receipts, not a universal winner.
| Product | Published example | Cash-flow question |
|---|---|---|
| Prospa term loan | $5,000–$500,000; up to five years, with longer terms limited by amount | Can the business meet scheduled repayments before the project produces receipts? |
| Shift Business Overdraft | $10,000–$2 million; variable interest and annual facility fee | Will the drawn balance fall after customers pay, and is access subject to review? |
| Earlypay invoice finance | Advertises advances up to 85% of the accounts-receivable ledger; approval and invoice eligibility apply | Are the invoices eligible and undisputed, and does the reserve leave enough cash for the gap? |
Read the product details in lines of credit, invoice finance and short-term loans. This page’s cash calendar should decide which of those comparisons is relevant.