GST cash flow tips for small business: ten ways to stop the BAS biting

GST is the strangest money in your business. It passes through your account, it looks like revenue, it can fund wages and stock for weeks, and then it leaves in one lump. Most owners who struggle with BAS aren’t careless; they’re running a business where GST arrives in dribbles and leaves in a flood, often while customers still owe them for the very sales it was charged on.

The good news is that the GST system has more settings than most people use. These ten tips are about choosing the right ones and building habits around them.

1. Treat one-eleventh of every taxable sale as someone else’s money

On a taxable sale, the GST is one-eleventh of the price your customer pays, about 9 cents in every dollar. The simplest cash flow fix is to move that share out of your trading account the day it arrives, into a separate account you never spend from.

Many banks let you set up an automatic sweep. Even a rough weekly transfer works. The point is that when the statement comes, the money is already sitting there instead of having been spent on last month’s stock.

If you sell a mix of taxable and GST-free items, as a grocer, a medical practice or an exporter might, your share is lower. The GST calculator helps you work out the right figure from a sample of real sales.

2. Pick the accounting basis that matches when you get paid

Businesses with aggregated turnover under $10 million can choose to account for GST on a cash basis. That single choice can transform cash flow.

	Cash basis	Accruals basis
GST on sales	Reported when the customer pays you	Reported when you issue the invoice (or receive payment, if earlier)
GST credits on purchases	Claimed when you pay the supplier	Claimed when you receive the tax invoice
Suits	Businesses with slow-paying customers, contractors, professional services	Businesses that buy on credit and sell for cash, such as many retailers
Watch out for	Credits arrive later if you pay suppliers slowly	Paying GST on invoices that are still unpaid, sometimes for months

A builder invoicing $220k in the last month of a quarter on accruals owes $20k in GST by the due date, even if the client won’t pay for 60 days. On a cash basis, that GST waits until the money arrives. Change bases with your accountant at the start of a period, not mid-quarter.

3. Know that the invoice date moves the bill

On an accruals basis, the date on the invoice decides which statement it falls into. An invoice dated 30 September lands in the September quarter; the same invoice dated 1 October lands three months later. Invoice when the work is genuinely done, but don’t rush invoices out on the last day of a quarter for the sake of it if the customer won’t pay for weeks. The reverse also applies: a supplier invoice received before quarter end brings your credit forward.

4. Lodge monthly if refunds are coming

Any GST-registered business can elect to lodge monthly. Monthly lodgers report by the 21st of the following month. That sounds like more work, and it is, but it has two cash flow advantages:

• Refunds arrive faster. Exporters, whose sales are generally GST-free while their purchases carry GST, and businesses making a big equipment purchase can wait three months for a refund on quarterly lodgement. Monthly cuts that to weeks.
• Each bill is smaller. A third of the size, every month, is easier to fund than one large payment every quarter, especially for businesses with lumpy sales.

Businesses with GST turnover of $20 million or more must lodge monthly anyway.

5. Consider the GST instalment method if your business is steady

Under the GST instalment method, the ATO works out a quarterly amount from your past figures, you pay that amount, and you report your actual GST once a year on an annual return. To be eligible you generally need aggregated turnover under $10 million, at least four months of lodgement history, your GST returns up to date and no net refund position.

The upside is predictability: you know the figure in advance and only do the full reconciliation once a year. The catch is the annual return. If your business grows strongly, the true-up can be large, so keep putting aside the actual GST from tip 1 regardless of what the instalment says.

6. Time big purchases with the BAS in mind

When you buy equipment, the GST credit is often one of the biggest numbers on that statement. On a chattel mortgage or hire purchase, you can generally claim the GST on the full purchase price in the period you buy the asset, even though you’re paying it off over years. Buying a $110k excavator with finance in the last week of a quarter can create a $10k credit on that statement.

With a lease, the GST is spread across the rentals instead. Neither is better in principle, but knowing which you have avoids nasty surprises.

7. Claim the GST back on bad debts

If you’re on an accruals basis and paid GST on an invoice a customer never pays, you may be able to adjust for it once you’ve written the debt off or it’s been overdue for 12 months. Owners often forget this, leaving GST paid on money they never received. Chasing debtors properly also helps here; our guide on how to manage slow-paying customers covers the practical side.

8. If you import, look at the deferred GST scheme

GST on imported goods is normally paid at the border before the goods are released, which can tie up cash for weeks before you’ve sold anything. Approved businesses on the ATO’s deferred GST scheme instead report and pay import GST on their next monthly BAS, often claiming the matching credit on the same statement. Monthly lodgement is a condition. For importers with big containers landing, it can free a meaningful amount of working capital. Import finance can cover the goods themselves.

9. Don’t let the BAS date fight your customers’ payment terms

Look at your average debtor days next to the BAS cycle. If customers pay in 45 days and the statement is due 28 days after the quarter, the timing works against you on every sale in the last month of each quarter. Fixes include tighter terms, deposits on larger jobs, the cash basis from tip 2, or invoice finance to turn unpaid invoices into cash before the ATO wants its share.

Need a short-term bridge while you put these habits in place? Tell us your next BAS figure and a specialist will call you.

10. Plan a backup that isn’t a credit card

Some owners have used a credit card as a GST safety net. The ATO has announced it will stop accepting credit card payments after 30 November 2026, so that fallback disappears. Better backups include a modest business overdraft or line of credit set up before you need it, a GST account that’s been allowed to build a small surplus, or an agreed ATO payment plan if a quarter goes wrong. If one already has, read what happens if you can’t pay your BAS.

A worked example: a homewares shop that changed two settings

This is an illustration. A homewares retailer in Toowoomba turns over about $1.4m a year, sells mostly for cash and card, and buys stock from wholesalers on 30-day terms. It lodges quarterly on a cash basis, and the December quarter BAS regularly lands at $34k after the Christmas rush, just as February sales slump.

The owner makes two changes with the accountant:

1. Switches to accruals. Because the shop’s customers pay immediately but it pays suppliers 30 days later, accruals lets it claim credits on big pre-Christmas stock orders as soon as the invoices arrive, roughly $6k earlier than before.
2. Moves to monthly lodgement for the busy months, so the GST collected in November and December is paid in December and January instead of all landing in late February.

The total GST owed for the year is unchanged. What changes is the shape: no single statement over $15k, and no February crisis. A small line of credit sits in the background for the odd bad month.

The point isn’t that accruals is better. For a contractor with slow-paying clients, the opposite switch would be the right one. It’s that the settings should match how cash really moves through your business.

When GST is the symptom, not the cause

Sometimes a business does all of this and still struggles. That usually points to a working capital problem: margins too thin, customers too slow or growth too fast for the cash on hand. Our guide on working capital for small business helps diagnose which, and the cash flow gap calculator puts a dollar figure on the shortfall.

Turning GST from a quarterly scare into a routine bill

Good GST habits do most of the work, but a growing business sometimes needs a buffer while they take hold. That’s where we can help, whether it’s a standing facility for quarter-end, finance for a big stock run or clearing a statement that’s already overdue.

Allow a minute or so for our enquiry. Sending it won’t trigger a credit check or leave any trace on your file, and your details stay with us rather than being shared out across dozens of lenders. A specialist reads your situation and calls you personally. Give us accurate figures on turnover, your usual BAS amount and how quickly customers pay, so we can point you to the right kind of facility straight away.

See what would smooth out your BAS →