Quick answer
After a funding crunch, rebuild a cash buffer by setting a target, often a few weeks of fixed costs, moving a set amount into a separate account every week, separating tax and super money and using good months to top up. A buffer plus a modest line of credit means the next surprise does not become an emergency.
Key points
- Set a buffer target based on fixed costs
- Move a set amount every week into a separate account
- Keep tax and super money separate
- A buffer plus a line of credit covers most surprises
A fast loan solves the immediate problem. A cash buffer stops the next one becoming urgent. Once the pressure is off, the most valuable thing an owner can do is rebuild a reserve that absorbs the surprises every business faces: a late payer, a breakdown, a slow month.
How big should it be?
A common starting point is a few weeks of fixed costs. Add up what goes out regardless of sales:
| Fixed cost | Weekly amount |
|---|---|
| Wages including PAYG and super | |
| Rent and outgoings | |
| Loan and lease repayments | |
| Insurance and subscriptions | |
| Utilities and phones |
Multiply the weekly total by the number of weeks you want to cover. Businesses with lumpy or seasonal income usually need more; those with steady daily takings may need less.
Where to keep it
Keep the buffer in a separate account. If it sits in the trading account, it gets spent. Many owners use a separate savings account with the same bank, so it is easy to move money across in an emergency but not so easy that it drifts into everyday spending.
If the deadline is already on top of you, start the 60-second enquiry now and read the rest while a real person looks at it.
Your first 24 hours, mapped out
| Step | How long it usually takes | The common hold-up |
|---|---|---|
| Tell us what you need | A minute | Rounded or guessed figures |
| Talk it through | A short call within minutes | Missed calls |
| Get approved | 15 minutes to an hour for most clean profiles | Statements that are hard to access |
| Sign documents | A few hours | A co-owner or guarantor who is unavailable |
| Receive funds | As little as 24 hours from enquiry | Late-day payment cut-offs |
How to build it
- Set a weekly transfer. Even a modest amount, moved automatically every week, adds up.
- Use good months. Move a share of any unusually strong month into the buffer.
- Separate tax and super. GST, PAYG and super belong in their own account; they are not part of the buffer.
- Repay short-term debt on schedule. Then redirect the freed-up cash to the buffer.
- Review quarterly. As costs grow, the target grows.
Buffer plus line of credit
A buffer covers small and medium surprises at no cost. A modest line of credit covers the bigger ones without a new application. Together, they turn most emergencies into routine decisions.
Fix the causes too
A buffer protects you from the effects of cash flow problems. Fixing the causes protects you from the problems themselves: shorter payment terms, deposits on big jobs, prompt invoicing, pricing that reflects true costs and a broader customer base.
A worked example (illustrative)
After using a short-term loan to cover a payroll gap, a cleaning company sets a buffer target of three weeks of wages and rent. It moves a fixed amount every Friday into a separate account and adds 20% of any month above average. Within nine months it reaches the target, and when a client pays late the following winter, the buffer covers it without any borrowing.
Make it automatic
The buffers that get built are the ones that do not depend on willpower. Set the weekly transfer up as an automatic payment the day after your main customer payments usually land, so it happens before the money can be spent elsewhere. Review the amount each quarter rather than each week; constant tinkering is how good intentions fade.
Documents that speed things up
The fastest approvals happen when this list is ready to send in one reply:
- A list of weekly fixed costs
- A separate buffer account
- A weekly automatic transfer
- Separate tax and super accounts
Speed bumps to avoid
Avoid these and you avoid most of the waiting:
- Keeping the buffer in the trading account
- Mixing tax money with the buffer
- Setting a target so large it never feels achievable
- Stopping transfers after the first good month
Related reading
- Fast business line of credit: A fast business line of credit gives you a standing limit to draw, repay and redraw. Set it up quickly and the next cash crunch is not an emergency.
- Line of credit versus loan for business emergencies: When a business line of credit beats a short-term loan for emergencies, and vice versa: speed, cost, flexibility and how to set one up before you need it.
- Cash flow gap calculator: Eight weeks of money in and out, showing your lowest week and the size of the gap.
- The Christmas cash crunch plan for Australian businesses: A week-by-week plan to get your business through the Christmas and January cash crunch: wages, super, stock, shutdowns, slow payers and funding arranged early.
- The payroll crunch playbook: what to do when wages are at risk: A day-by-day plan for when payroll is at risk: calculate the gap, speak to staff, chase receivables, arrange fast funding and fix the cause for next time.
Terms used in this guide
- Guarantor: a person who agrees to repay the loan if the borrower cannot.
- BAS: Business Activity Statement, lodged with the ATO to report GST, PAYG withholding and other amounts.
- Line of credit: a standing limit you can draw, repay and draw again, paying mainly for what you use.
Check these before you commit
- Exactly what do you need from me to release funds today?
- Who needs to sign, and how will documents arrive?
- What is the total cost over the full term?
- Can the payment go directly to the creditor I need to pay?
- What happens if my repayment source arrives late?
The fastest enquiries have one thing in common
The enquiry takes about 60 seconds, and those 60 seconds decide how smoothly everything after it goes. Accurate figures for revenue and the amount, a straight answer about credit history and a clear yes or no on property mean the assessor can move straight to the decision. Guesswork means rework, and rework is the enemy of a 24-hour turnaround.
Before you go
- Set a buffer target based on fixed costs
- Move a set amount every week into a separate account
- Keep tax and super money separate
- A buffer plus a line of credit covers most surprises
From enquiry to funds
Think of it in four blocks of time. The first few minutes: your enquiry and the first call. The first hour: evidence in, assessment done, approval given, sometimes inside 15 minutes. The next few hours: loan documents issued and signed online by everyone who needs to sign. Then payment: funds released, with money landing within 24 hours of enquiring entirely possible. Each block runs faster when you have your documents, your guarantors and your phone close at hand.
Get a real answer, fast
If this sounds like your situation, the next step takes about a minute. There is no credit check to enquire, your details are not sprayed to multiple lenders, and a real person picks it up. The more accurate your answers, the quicker the match. Enquire now.
Frequently asked questions
How big should a business cash buffer be?
Many owners aim for a few weeks of fixed costs such as wages, rent and loan repayments, but it depends on how predictable your income is.
Where should I keep the buffer?
In a separate account, so it is not mistaken for spending money.
Should I repay a loan or build a buffer first?
Usually both, in balance. Meet loan repayments first, then add to the buffer.
Is a line of credit a substitute for a buffer?
It is a good partner, not a substitute. Cash on hand costs nothing to use.
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