Read time: 5-6 minutes
Published Monday, 1st June 2026

 

If your business has payroll, superannuation, supplier payments, tax obligations, unpaid invoices, stock, Australian Taxation Office debt, or is considering owning or leasing new business assets before 30 June, cash flow 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 immediate issue is cash flow. A tax deduction can change taxable income, but it does not remove the need to pay wages, suppliers, superannuation, rent, loan repayments, 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 support the business after 30 June.

Start with the cash position

A practical EOFY review should begin with the business cash position, not with a list of possible deductions.

A business can be profitable on paper and still experience cash flow pressure. This can happen when money is tied up in unpaid invoices, stock, work in progress, slow customer payments or large upcoming commitments.

Before 30 June, business owners should review:

  • current bank balances
  • expected customer receipts
  • overdue invoices
  • supplier payments due before and after 30 June
  • upcoming payroll obligations
  • superannuation amounts owing
  • Australian Taxation Office (ATO) balances and payment arrangements
  • stock, materials and work in progress
  • planned asset purchases
  • prepayments being considered
  • expected cash inflows and outflows for July, August and September

This helps identify whether year-end decisions are commercially practical, not just whether they may affect tax timing.

Do not spend money only to create a deduction

Buying equipment, vehicles, tools, technology or other business assets before 30 June can make sense where the purchase is genuinely needed and affordable. It should not be treated as an automatic cash flow improvement.

A deduction may reduce taxable income, but the business still has to pay for the item. If the purchase reduces working capital, increases finance costs or creates pressure in July, the timing should be reviewed carefully.

For the 2025 to 2026 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.

Business owners should speak with their accountant before relying on deduction timing for an asset purchase.

Understand the difference between tax timing and cash flow

EOFY decisions can affect tax timing, but they do not always improve cash flow.

For example, buying equipment before 30 June may bring forward a deduction if the eligibility rules are met. However, the cash or finance commitment still needs to be managed.

Prepaying expenses can also change deduction timing in some circumstances. However, paying early may not be the best decision if the business needs that cash for wages, suppliers, tax, superannuation or trading activity after year-end.

Before making EOFY spending decisions, business owners should ask:

  • Does the business need this asset or expense now?
  • Can the business afford the payment or finance commitment?
  • Will this decision place pressure on cash flow after 30 June?
  • Is the decision commercially useful, or only tax-driven?
  • Have the tax rules and timing requirements been checked?

Tax timing should be considered together with cash flow, working capital and business needs.

Review unpaid invoices before year-end

Unpaid invoices can create a misleading view of business performance. Revenue may have been recorded, but the cash has not been received.

Before 30 June, business owners should review aged debtors and separate invoices into practical categories:

  • invoices likely to be collected
  • invoices requiring follow-up
  • invoices under dispute
  • invoices that may not be recoverable

Where a business accounts for income on an accruals basis, a genuinely bad debt may be deductible in some circumstances if it has previously been included in assessable income and is properly written off before year-end. Different rules can 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, materials and work in progress

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 relevant for businesses in construction, trades, manufacturing, wholesale, transport, food production and other industries where cash can be tied up in inventory, materials or unfinished jobs.

A review may identify:

  • obsolete stock
  • slow-moving inventory
  • inaccurate records
  • poor job margins
  • over-ordering
  • stock shortages
  • costs that have not been allocated correctly

Stock can affect taxable income. It also affects working capital. Both should be understood before year-end figures are finalised.

Make superannuation a cash flow priority

Superannuation should be treated as a core cash flow obligation, not as a payment to manage after other expenses have 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 compliance issues and can affect deductibility.

Employers should also 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 the 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 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
  • expected June and July obligations

Where a business has ATO debt, the right response will depend 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 an expense, consider:

  • whether the expense is genuinely needed
  • whether the business can afford the payment
  • what period the payment relates to
  • whether keeping the cash would better support trading in July and August
  • whether the deduction timing has been reviewed correctly

Prepayments should be checked with an accountant before assuming the deduction applies in the current income year.

Forecast cash flow 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
  • planned hiring or expansion

The aim is to make year-end decisions that support the business, not decisions that create short-term pressure after 30 June.

What business owners should review before 30 June

Before making EOFY decisions, business owners should ask:

  • 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 prepared for payroll and superannuation changes from 1 July 2026?
  • Will our decisions leave the business in a stronger position after 30 June?

EOFY planning should not be rushed. The best decisions are usually made after reviewing cash flow, tax timing, compliance obligations and business plans 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, consider speaking 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.

 

For general information only

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.