Read time: 4-5 min
Published Monday, 1st June 2026
If your business has tax, superannuation, payroll, supplier payments, stock, unpaid invoices, Australian Taxation Office debt or planned asset purchases before 30 June, cash flow planning should be reviewed before end-of-financial-year decisions are made.
End-of-financial-year (EOFY) planning is often discussed as a tax exercise. For many businesses, the more practical issue is cash flow. A deduction can change taxable income, but it does not remove the need to pay wages, suppliers, superannuation, loan repayments, rent, tax instalments and other business costs.
Before making year-end decisions, business owners should understand what cash is available now, what payments are due soon, and whether any proposed spending will leave the business in a stronger position after 30 June.
Start with the cash position
A useful EOFY review should begin with the business cash position, not a list of possible deductions.
A business can be profitable on paper and still have cash flow pressure. This often happens when money is tied up in unpaid invoices, stock, work in progress, slow customer payments or large upcoming commitments.
EOFY cash flow review checklist
| Area to review | What to check before 30 June | Why it matters |
|---|---|---|
| Cash on hand | Current bank balance and expected receipts | Shows whether the business can meet short-term commitments. |
| Debtors | Overdue invoices and slow-paying customers | Identifies cash that should be collected before year-end. |
| Suppliers | Payments due before and after 30 June | Helps avoid creating pressure in July. |
| Wages | Upcoming payroll commitments | Ensures normal operating costs are covered. |
| Superannuation | Amounts owing and payment timing | Late payments can create compliance and deductibility issues. |
| Australian Taxation Office (ATO) debt | Balances, payment plans and overdue amounts | Helps manage interest, lodgement and director risk. |
| Stock | Obsolete, slow-moving or inaccurate stock records | Supports better tax and working capital visibility. |
| Asset purchases | Whether the purchase is needed and affordable | Avoids spending cash only to create a deduction. |
| Prepayments | Whether paying early is commercially sensible | Prevents cash leaving the business unnecessarily. |
| July to September forecast | Expected cash inflows and outflows | Checks whether EOFY decisions create post-year-end pressure. |
Do not spend money just to create a deduction
Buying equipment, vehicles, tools, technology or other business assets before 30 June can be useful where the purchase is commercially necessary and affordable. It should not be treated as an automatic cash flow improvement.
A deduction can reduce taxable income, but the business still pays for the item. If the purchase drains working capital, increases finance costs or creates pressure in July, the timing should be reviewed carefully.
For the 2025-26 income year, eligible small businesses may be able to use the $20,000 instant asset write-off for eligible assets costing less than $20,000, provided the conditions are met. The threshold applies per eligible asset. The asset must also be first used or installed ready for use by the required date.
This should be reviewed with an accountant before relying on the deduction timing.
Deduction versus cash flow
| Decision | Possible tax effect | Cash flow question |
|---|---|---|
| Buying equipment before 30 June | Deduction timing may change if eligibility rules are met. | Does the business need the asset now, and can it afford the payment or finance? |
| Prepaying expenses | Deduction timing may change depending on the rules. | Does paying early help the business, or would keeping the cash be safer? |
| Writing off bad debts | A deduction may be available in some circumstances. | Has the business made proper collection efforts and documented the debt? |
| Holding excess stock | Stock value can affect taxable income. | Is cash tied up in stock that is not moving? |
| Paying superannuation before year-end | Deductibility depends on timing and processing. | Has the business allowed enough time for the payment to be received? |
Review unpaid invoices before year-end
Unpaid invoices can create a false sense of business performance. Revenue may have been recorded, but the cash has not arrived.
Before 30 June, business owners should review aged debtors and separate invoices that are likely to be collected from those requiring immediate follow-up, those under dispute and those that are unlikely to be recovered.
Where a business accounts for income on an accruals basis, a genuinely bad debt may be deductible if it has previously been included in assessable income and is properly written off before year-end. Different rules apply where a business accounts for income on a cash basis.
The cash flow priority is collection. The tax treatment should be reviewed after the business has assessed whether the debt is genuinely recoverable.
Check stock, work in progress and margins
For businesses that carry stock, materials or work in progress, EOFY is a useful time to check whether records reflect commercial reality.
This is particularly important for businesses in construction, trades, manufacturing, wholesale, transport, food production and similar industries where cash can be tied up in materials, inventory or unfinished jobs.
A stock and work in progress review can help identify obsolete stock, inaccurate records, poor job margins, over-ordering, stock shortages and costs that have not been allocated correctly.
Stock can affect taxable income. It also affects working capital. The business should understand both before finalising year-end figures.
Make superannuation a cash flow priority
Superannuation should be treated as a core cash flow obligation, not a payment to manage after everything else has been paid.
Employers should check that superannuation has been calculated correctly, funded properly and paid with enough time for processing. Late or unpaid superannuation can create additional compliance issues and can affect the deductibility of the payment.
Employers also need to prepare for Payday Super from 1 July 2026. Under Payday Super, employers will be required to pay superannuation at the same time as salary and wages.
This will change the cash flow rhythm for many employers. Businesses that currently plan around quarterly superannuation payments should review payroll systems, bank funding, clearing house arrangements and payment timing before the new rules begin.
Review Australian Taxation Office debt and payment arrangements
Tax debt should not be left until after 30 June without review.
From 1 July 2025, general interest charge and shortfall interest charge incurred on Australian Taxation Office (ATO) debts are no longer deductible. This increases the after-tax cost of carrying ATO interest.
Businesses should review income tax balances, Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, Pay As You Go (PAYG) instalments, Business Activity Statement (BAS) lodgements, superannuation-related liabilities, payment plans, overdue amounts and expected June and July obligations.
Where a business has ATO debt, the right response depends on the amount owed, the business structure, cash flow, lodgement status and payment history.
Company directors should also understand that some unpaid company obligations can create personal exposure under the director penalty regime. This should be reviewed early where tax or superannuation obligations are overdue.
Consider prepayments carefully
Prepaying expenses before 30 June can change deduction timing in some circumstances. It can also move cash out of the business earlier than necessary.
Before prepaying expenses, consider whether the expense is genuinely needed, whether the business can afford the payment, what period the payment relates to and whether keeping the cash would better support July and August trading.
Prepayments should be reviewed with an accountant before assuming the deduction applies in the current income year.
Forecast the first quarter after 30 June
Good EOFY planning should not leave the business short of cash after year-end.
A practical cash flow forecast should cover at least July, August and September. It should include expected receipts, wages, superannuation, supplier payments, rent, tax payments, finance repayments and any planned capital spending.
This is especially important where the business has seasonal trading patterns, large supplier payments due after 30 June, payroll growth, upcoming tax instalments, equipment finance, stock purchases, slow-paying customers, ATO payment arrangements or planned hiring.
The aim is to make year-end decisions that support the business, not decisions that create short-term pressure.
What actually matters before 30 June
Before 30 June, the most useful questions are often simple:
- Do we know what cash is available now?
- Do we know what cash is needed in the next 8 to 12 weeks?
- Are customer invoices being collected?
- Are tax and superannuation obligations under control?
- Are we buying assets because they are needed, or only because it is EOFY?
- Is stock accurate and commercially useful?
- Are old debts collectible?
- Will any prepayments help the business, or create pressure?
- Are we ready for payroll and superannuation changes from 1 July 2026?
- Do our decisions leave the business stronger after 30 June?
EOFY planning should not be rushed. The best decisions are usually made after reviewing cash flow, obligations, tax timing and the business plan together.
Speak with your accountant before making EOFY decisions
If your business is considering asset purchases, prepayments, debt write-offs, stock adjustments, ATO payment arrangements or changes to payroll funding before 30 June, speak with your accountant before acting.
The right approach will depend on your business structure, cash flow, tax position, superannuation obligations, compliance status and plans for the months ahead.
Factor1 can help business owners review their EOFY position and identify practical next steps before decisions are made.
Please note: For general information only. Individual outcomes may vary depending on business structure, cash flow, tax position, timing, compliance status and personal circumstances. This article does not constitute tax, financial or legal advice.