TL;DR: Spot clients heading for a cashflow crisis by watching for growing accounts receivable and rising days sales outstanding, a bank balance eroding over three to six months, heavier overdraft use, late supplier payments and GST or tax instalment arrears. Raise it early as an observation, not an alarm, and have a practical recommendation such as invoice finance ready.
Cashflow crises rarely appear without warning. The warning signs are usually visible in the financials weeks or months before a crisis hits, if you know where to look.
As an accountant or advisor, you have access to the financial data that tells this story. Here is how to read it.
If a client's accounts receivable balance is growing quarter on quarter, not because revenue is increasing, but because invoices are being paid more slowly, that is a warning sign.
Calculate Days Sales Outstanding (DSO): the average number of days it takes for invoices to be paid. If DSO is trending up, your client's clients are taking longer to pay. This compresses cashflow even if revenue is stable.
An obvious one, but easy to miss in the context of a profitable P&L. Look at the trend in the bank balance over three to six months. Gradual erosion, even from a comfortable starting point, is a signal that cash outflows are consistently exceeding cash inflows.
A business that is drawing on its overdraft more frequently, or that consistently runs close to its overdraft limit, is experiencing cashflow pressure. The overdraft is doing the work that should be done by operating cashflow.
Look at accounts payable ageing. If a client is consistently paying suppliers late, particularly if they are pushing to or beyond 60 days, they are managing cashflow by delaying payment. This is a signal, not a solution.
Missing or deferring GST payments or tax instalment obligations is often one of the last warnings before a serious cashflow crisis. It means the business has exhausted easier options and is now managing a government creditor.
The best time to have the cashflow conversation is well before a crisis. When you see these signs in the data, raising them proactively with the client, framed as an observation rather than an alarm, gives you both time to act.
Most clients will welcome the proactive insight. Being told about a problem before it becomes urgent is one of the most valuable things an advisor can do.
Once you have identified the timing problem, you can offer a practical solution. Invoice finance, specifically FundTap, which connects directly to their existing accounting software, is often the simplest and most appropriate tool for businesses experiencing receivables-related cashflow pressure.
Having a specific recommendation ready when you raise the issue is far more valuable than simply flagging a problem without a path forward.
The most common cause is timing, the gap between earning money and receiving it. For B2B businesses, this means waiting 30-90 days for customers to pay.
How can I improve cashflow quickly?Invoice promptly, shorten payment terms, follow up on overdue invoices, and consider invoice finance to access funds before customers pay.
Can invoice finance help with cashflow?Yes. FundTap provides on-demand invoice finance with no lock-in contracts and fees from 4%. Select an invoice and, once approved, get funded within 2 hours.
What are the best business funding options for an Australian SME with cashflow gaps?Start with what's causing the gap. When it's timing, money earned but tied up in unpaid invoices, FundTap brings that money forward on an invoice the business chooses, funded within 2 hours once approved. Repayment comes out automatically on the invoice due date by direct debit, and the funding limit is ready to use again straight away.
What if my client's customer pays late? Does that break the repayment?No. FundTap lets the business move its own repayment date by up to 7 days in the FundTap portal (14 once it has completed two fundings), and the FundTap team can talk through anything longer than that. Spotting a slow payer early, using the warning signs above, is the best time to have that conversation.
Bank won't extend our overdraft. What other options do Australian small businesses have for short-term working capital?If the business invoices customers on terms, an unpaid invoice is money it's already owed. FundTap brings that money forward on the business's own timing: up to 90% of the invoice value, for a flat fee from 4% per invoice, quoted upfront before you commit. There's no lock-in and no monthly fee, and nothing is owing while it isn't in use.