Content reviewed and verified by Graham Chee, with FCPA-led practice at Local Knowledge, Mascot NSW. Continuous CPA Australia member since 1986. Prior career at Goldman Sachs, BNP Investment Management and Merrill Lynch..
TL;DR
The rhythm of what you owe and what you are owed decides whether a profitable business actually has cash. Here is how to run it well.
Key Takeaways
- Invoices raised promptly and accurately, with clear payment terms
- A weekly view of who owes you, and systematic follow-up on overdue accounts
- Supplier bills entered on time so you never miss a due date or a discount
- Payment runs scheduled to protect cash without damaging supplier relationships
- Aged receivables and payables reviewed every month
Profit Is Not Cash
Why AP and AR discipline matters more than the P&L.
A business can be profitable on paper and still run out of money. The gap between the two is almost always timing: money going out to suppliers (accounts payable) faster than money coming in from customers (accounts receivable). Managing both sides deliberately is one of the most practical things good bookkeeping delivers.
Accounts receivable is what your customers owe you; accounts payable is what you owe your suppliers. Keeping both accurate and current gives you a true picture of your position and the confidence to make commitments — hiring, ordering stock, taking on a project — without guessing.
What Good AP/AR Management Looks Like
Invoices raised promptly and accurately, with clear payment terms
A weekly view of who owes you, and systematic follow-up on overdue accounts
Supplier bills entered on time so you never miss a due date or a discount
Payment runs scheduled to protect cash without damaging supplier relationships
Aged receivables and payables reviewed every month
GST correctly captured on both sales and purchases for an accurate BAS
Getting Paid Faster — Without Chasing Constantly
Structure beats nagging.
Slow-paying customers are a cash-flow problem, not just an admin annoyance. The fix is structural: invoice the moment work is complete, state terms plainly, and use your software to send automatic, polite reminders before and after the due date. A consistent, unemotional process collects far more than sporadic chasing.
On the payables side, the discipline is the reverse — pay on time, never early without reason, and use the full agreed terms to hold cash a little longer. Managed together, these two rhythms smooth the peaks and troughs that catch so many Sydney businesses out.
A Simple Weekly AP/AR Routine
Update the Ledgers
Enter new sales invoices and supplier bills so both aged reports are current.
Review What You Are Owed
Check the aged receivables report and follow up anything overdue that day.
Plan the Payments
Confirm which supplier bills fall due and schedule a payment run that protects cash.
Forecast the Week Ahead
Use the two reports to see your true short-term cash position before committing to new spending.
AP/AR Questions
Q.What payment terms should I offer?
Shorter is better for cash flow — 7 or 14 days suits many service businesses. The right terms depend on your industry and customers; we help you set terms that are competitive but protect your position.
Q.Should I use automatic invoice reminders?
Yes. Software-driven reminders are consistent, professional and far more effective than manual chasing — and they remove the awkwardness from collecting.
Q.How do I know if a customer is becoming a risk?
The aged receivables report is your early warning system. A customer whose balance keeps ageing past terms warrants a conversation before the exposure grows.
Q.Can you manage AP and AR for me?
Yes — we can maintain both ledgers, run reminders and prepare payment runs for your approval, so you keep control without the daily admin.
About the Author
Graham Chee, FCPA, CPA, GRCP, GRCA
Principal and Founder, Local Knowledge
Graham Chee is the principal and founder of Local Knowledge, an FCPA-led Australian practice that brings institutional-grade compliance, investment-structure and intellectual-property experience directly to owner-managed businesses. Graham is a Fellow of CPA Australia (FCPA since November 2005, continuous CPA member since 1986) and holds the OCEG Governance, Risk & Compliance Professional (GRCP) and Governance, Risk & Compliance Auditor (GRCA) designations. His prior career includes senior roles at Goldman Sachs, BNP Investment Management and Merrill Lynch. Graham was previously portfolio manager of the Asian Masters Fund (IPO December 2007 – 31 December 2009), which returned +29% in AUD terms versus the MSCI Asia Pacific (ex Japan) benchmark. He signs off on 100% of client files personally.
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This article is general information only and does not constitute financial, tax or accounting advice. Rates, thresholds and lodgement dates change and depend on your circumstances — Graham Chee, FCPA confirms the current position for your business before you act.
Graham Chee FCPA, CPA, GRCP, GRCA · Principal, Local Knowledge · Mascot NSW · CPA-signed files