Meta description: Discover the five numbers every Australian small business should check this week, including cash runway, debtor days, margins, cash conversion cycle and debt costs.
When I reviewed one client’s books recently, the owner was confident. Revenue was steady, the team was busy and customers seemed happy.
Then I asked one question:
“If every invoice stopped being paid tomorrow, how many weeks of wages and rent could the business cover?”
The honest answer was about three weeks.
The business felt fine. But the numbers were telling a different story.
That gap between how a business feels and what its cashflow can actually withstand is where good bookkeeping becomes genuinely useful. It is also where fractional CFO thinking matters. Profit is important, but cash buys time, options and breathing room.
And there is plenty to pay attention to this week.
What’s happening in the market this week?
CreditorWatch’s September 2026 Business Sentiment Survey found that 49% of respondents had enough liquid cash reserves to cover operating expenses for less than six months. Almost one in four said their reserves would last no more than three months.
The August Business Risk Index also recorded 1,834 first-time insolvencies, with a heavy concentration in residential building. That is a clear reminder that a full order book does not necessarily mean a safe business.
The RBA’s cash rate is now 4.60%, following the 30 September increase. Governor Michele Bullock has described the setting as restrictive. The next RBA Board meeting is on 3 November, with Westpac and ANZ forecasting another 25 basis point increase to 4.85%. CBA and NAB have not committed, creating the first real split among the big four this cycle.
The trigger to watch is the September quarter CPI release on 28 October, just six days before that meeting.
A 25 basis point rise may reduce household borrowing capacity by around 2–3%. For a business, the more practical question is: what does it do to the annual interest bill?
On a $500,000 business loan, a 0.25% increase is approximately:
$500,000 × 0.25% = $1,250 extra interest each year.
That is simple enough to calculate for your own business. This week, I would check these five numbers.
1. Cash runway in weeks, not months
Cash runway answers a direct question: how long could the business keep paying its essential bills if revenue stopped?
Start with cash available in the bank. Then identify weekly fixed costs, such as:
- Wages and superannuation
- Rent
- Software and subscriptions
- Insurance
- Regular loan repayments
- Essential utilities and professional fees
Then calculate:
Cash on hand ÷ weekly fixed costs = cash runway in weeks
For example, $90,000 in available cash divided by $30,000 in weekly fixed costs equals three weeks.
Do not include unpaid invoices in this calculation. They may become cash, but they are not cash today.
The bookkeeping action that makes it trustworthy: reconcile every bank account and separate operating cash from GST, PAYG withholding, superannuation and other money already committed.
2. Debtor days and invoices over 60 days
Debtor days show how quickly customers are paying you.
A simple version is:
Accounts receivable ÷ credit sales × number of days in the period
If your business has $120,000 in unpaid invoices and $600,000 in quarterly credit sales, your debtor days are approximately 18 days.
That number is useful, but it is not enough. I also want to know:
- How many dollars are more than 60 days overdue?
- Which customers owe that money?
- Do two customers make up most of the overdue balance?
- Are invoices being issued promptly and correctly?
A debtor ledger can look healthy overall while one large customer quietly holds the business hostage.
The bookkeeping action that makes it trustworthy: review the aged receivables report every week and use automated debtor reminders, rather than relying on memory or awkward follow-up conversations.
3. Gross margin by service line or project
A blended gross margin can hide a lot.
One service line may be producing excellent returns while another is consuming time, contractors and materials without paying its way.
For each service, project or revenue stream, compare:
Revenue minus direct delivery costs = gross profit
Then:
Gross profit ÷ revenue = gross margin
Direct costs may include contractors, project-specific materials, freelance support, practitioner payments or delivery labour.
For example, a creative agency might report a 52% overall gross margin. But once the numbers are separated, branding projects may be at 65% while urgent production work is sitting at 28%.
That changes the conversation. Should pricing change? Should the scope be tightened? Is the work strategically valuable, or simply keeping everyone busy?
Money is not something to feel guilty about. A healthy margin funds wages, stability, reinvestment and the ability to do meaningful work responsibly.
The bookkeeping action that makes it trustworthy: code contractor, materials and direct labour costs to the correct project or service line every time.
4. Cash conversion cycle in days
The cash conversion cycle measures how long money takes to leave the bank for a job and return as cleared cash.
The simple formula is:
Debtor days + work-in-progress days – supplier or creditor days
Here is the plain-English version:
- Debtor days: how long customers take to pay
- Work-in-progress days: how long work sits unfinished or unbilled
- Supplier days: how long you have before suppliers need to be paid
Imagine a construction business paying suppliers and contractors upfront, waiting three weeks to submit a progress claim and then waiting another 30 days for payment. The work may be profitable, but the cash cycle can still be painful.
This number helps explain why a business can be growing and still need careful cashflow planning for small business.
The bookkeeping action that makes it trustworthy: record work in progress and unbilled work consistently at month-end, then match supplier bills and customer invoices to the correct job.
5. Debt service cover, or the cost of another rate rise
Debt service cover asks whether the business generates enough operating cash to cover loan repayments and interest.
If that calculation feels too technical, start with a clearer stress test:
- Note the annual interest bill at the current rate.
- Recalculate it at a rate 0.25% higher.
- Recalculate it again at a rate 0.50% higher.
- Add the difference to your cashflow forecast.
For a $500,000 loan:
- 0.25% higher = approximately $1,250 extra interest each year
- 0.50% higher = approximately $2,500 extra interest each year
The impact will vary depending on the loan structure, repayment schedule and whether the rate is fixed or variable. But the point is to remove the fog. What would another rate rise actually cost this business?
The bookkeeping action that makes it trustworthy: keep loan balances, interest and principal repayments correctly separated, and update the forecast whenever lending terms change.
The systems thread: these numbers should not take a weekend
These five numbers should be produced automatically each month by the accounting file and a small management dashboard.
That requires:
- Bank feed rules that are reviewed, not blindly accepted
- Reconciled bank, loan, payroll and clearing accounts
- Consistent project and service-line categories
- A simple monthly management report
- Automated debtor reminders
- A rolling cashflow forecast
The goal is a five-number review that takes 20 minutes, not a spreadsheet rebuild that takes an entire weekend.
This is the practical side of systems consulting. The system should support better decisions, not create another administrative burden. Whether you manage it internally or use virtual CFO services, the important thing is that the information is timely, consistent and easy to understand.
What to do in the next 30 days
- Set a cash runway target. Choose a minimum number of weeks and record it in your forecast.
- Call or email the two largest overdue customers. Do not wait for the month-end report.
- Split your gross margin by service, project or location.
- Stress-test debt at 0.25% and 0.50% higher.
- Schedule a monthly 20-minute finance review.
- Make capital purchases visible. The $20,000 instant asset write-off is now permanent for small businesses with aggregated turnover under $10 million, but purchases still need to be visible in the cash forecast before committing funds.
Industry check: where these numbers matter most
Creative agencies: Review project margin and contractor timing separately. A busy pipeline is not the same as money in the bank. For agencies comparing options for creative agency accounting in Australia, the key question is whether project-level numbers support confident pricing and hiring decisions.
Medical and allied health: Look at Medicare and private health receipt timing, practice manager reporting and contractor practitioner arrangements. Revenue may be strong while settlement timing creates short-term pressure.
Building and construction: Track progress claims, retentions and supplier terms closely. With residential building carrying a heavy share of recent insolvencies, a profitable contract can still become dangerous when costs are paid long before claims clear.
Real estate: Trust money and operating money must never be mixed. Review landlord and tenant payment timing, management fees and the cash required between collection and disbursement.
Hair and beauty salons: Compare occupancy costs with revenue per chair or treatment room. Use the forecast to smooth quieter weeks rather than relying on a strong weekend to rescue the month.
HR and recruitment: Watch the gap between paying recruiters and receiving success fees. The placement may be profitable, but the cash conversion cycle can be long.
A quick October scam reminder
The ATO is warning about fake “income statement review” emails that can install malicious remote-access software. The ATO never sends unsolicited messages with links to login pages or attachments. Type the myGov address into your browser yourself, and report suspicious messages to ReportScams@ato.gov.au or 1800 008 540. See the ATO scam alerts for more guidance.
Do these five things this week
- Calculate your cash runway in weeks
- Find the dollar value of invoices over 60 days old
- Check gross margin for one service or project
- Calculate your cash conversion cycle
- Check one number you have never looked at before
Frequently asked questions
How many months of cash should a small business hold?
There is no universal number. A stable service business may set a different target from a seasonal salon, construction company or recruitment agency. Start by calculating fixed costs in weeks, then build a buffer that reflects your industry, customer concentration, debt and revenue volatility.
What is a good debtor days figure?
It depends on your agreed payment terms. If customers have seven-day terms, 35 debtor days is a warning. If your contracts specify 30 days, an average around 30–35 days may be reasonable, but invoices over 60 days still deserve immediate attention.
How often should I review my cashflow forecast?
Update the underlying information at least monthly and review it more frequently when cash is tight, debt is changing, a major project is underway or a key customer is late. A rolling 13-week forecast is a practical starting point for many small businesses.
If these numbers are competing with an already full to-do list, book a strategy call with Ethical CFO.
We’ll help untangle the numbers, strengthen the system and give you back decision-making room.