A business can show a healthy profit on the income statement and still be short of cash to pay salaries on the 25th. Profit depends on accounting choices about when income and costs are recorded. Cash is the money in the bank. This guide covers how to manage cash: the forecast, the timing of tax payments and the South African cost shocks to plan for.

Why profit and cash aren't the same thing

Your accounts record a sale when you invoice it. The money arrives later. You can book R200,000 of profit this month while your bank balance falls, because customers haven't paid, stock has gone out and a VAT payment is due to SARS.

These five items tie up cash while your profit figure stays the same:

  • Debtors — sales you've made but not been paid for. They count as profit before the cash arrives.
  • Stock — cash you've already spent on goods that have not yet been sold.
  • VAT — money you collect on behalf of SARS and pay over with the VAT201.
  • Provisional tax and loan repayments — cash paid out that does not appear as an expense in your profit.
  • Owner drawings — money you take for yourself, which can exceed the cash the business generates.

The rolling 13-week cashflow forecast

A rolling 13-week cashflow forecast is a week-by-week view of cash in and cash out for the next quarter. You update it every week so it always looks 13 weeks ahead. Thirteen weeks is long enough to see a shortfall coming and short enough to forecast with reasonable accuracy.

Start with your opening bank balance. Each week, add the money you expect in, based on when customers pay, and subtract everything going out: wages, rent, suppliers, VAT, PAYE, loan repayments, drawings. The closing balance of one week becomes the opening balance of the next. Now you can see the tight weeks before they arrive.

Building it, step by step

  1. List your opening bank balance for week 1.
  2. Add expected receipts per week, timed to when each customer pays. If a customer pays at 45 days, put the cash in the week it arrives.
  3. Subtract fixed outgoings — salaries, rent, debit orders, loan repayments — in the weeks they hit.
  4. Add the lumpy, easy-to-forget items: the VAT201 payment, the August and February provisional tax payments, annual insurance, PAYE on the 7th.
  5. Calculate each week's closing balance and carry it to the next week's opening.
  6. Every week, delete the oldest column, add a new week 13, and update the forecast for what happened.

A forecast shows a cash shortfall weeks in advance. Six weeks out, you can still call in a debtor, delay a purchase or arrange finance before payroll is due.

Collecting from debtors

Collecting from customers sooner releases cash without borrowing. These steps help:

  • Invoice as soon as the work is done. The payment period starts when the customer receives the invoice.
  • Put clear payment terms and easy-to-copy banking details on every invoice.
  • Send a polite reminder a few days before the due date.
  • Follow up on a fixed schedule: day 1 overdue, day 7 and day 14.
  • Offer easy payment options and ask for deposits on large jobs, so your cash does not fund a client's project.
  • For customers who pay late more than once, ask for payment up front or on delivery.

Match this on the other side, too. Your suppliers' payment terms let you hold cash for longer at no cost. Pay on the due date and keep the cash in your account until then. Shorten the time between doing the work and being paid, and use the full time allowed between buying and paying.

VAT and provisional tax timing

Set money aside for VAT and provisional tax as it arrives, so the cash is there when each payment is due.

VAT. If you're registered — compulsory once your taxable supplies pass R2.3m in any rolling 12 months from 1 April 2026, voluntary from R120,000 — you charge 15% on your sales and hand the net over to SARS via a VAT201 every two months. You collect that VAT on behalf of SARS. Move the VAT you collect into a separate account the day it comes in, so it is there when the VAT201 falls due.

Provisional tax. You pay income tax in advance, in two payments — one at the end of August, one at the end of February (with an optional top-up at end of September). Companies are automatically provisional taxpayers. If you haven't saved monthly, the end-of-February payment can be large, and if your estimate is too low SARS adds a 20% under-estimation penalty. Save for tax every month. Our provisional tax guide walks through the estimates in detail.

End-Aug & end-Feb
the two provisional tax payment dates each year

Building a cash buffer

A South African business plans for load-shedding, which can stop a day's trade or mean running a diesel generator. Fuel and electricity price rises increase costs at short notice. A large customer can stop ordering for a month.

Build a cash buffer for these events. Aim to hold enough to cover one to three months of fixed costs — rent, salaries, essential suppliers — in a separate account you don't dip into. Get there by putting away a fixed small percentage of every payment received, before you spend anything. With load-shedding and cost rises to plan for, aim for closer to three months.

Price the real cost of load-shedding into your quotes and your forecast — generator fuel, lost trading hours, spoiled stock, staff standing idle. If these costs are in your prices, your customers' payments cover them.

Cashflow mistakes to avoid

  • Confusing the bank balance with available cash. Part of that balance is VAT and next month's PAYE, which belong to SARS.
  • Treating the annual budget as a cashflow tool. A budget shows the year as a whole. A weekly forecast shows whether you have the cash for payroll on the 25th.
  • Following up on debtors only now and then. Follow up on a fixed schedule.
  • Drawing money out on a good month. A strong month can mean large receipts arrived before the tax and supplier payments that go with them.
  • Saving nothing for provisional tax until February. The dates are known a year ahead, so save for them each month.

Worked examples

The cash released by faster collection

A firm turning over R6m a year with customers paying at 60 days is effectively lending them about R1m of working capital (roughly two months of sales sitting in debtors). Bring the average payment time down to 30 days and you release roughly R500,000 of cash from the same sales, without borrowing.

Funding the February provisional payment

A consulting Pty Ltd expects R900,000 taxable profit, taxed at 27% — about R243,000 for the year, split across the August and February provisional payments. Move roughly R20,000 a month into a separate tax account and both IRP6 payments are funded when they fall due.

Where we come in

We build the rolling 13-week forecast with you, set up separate savings for VAT and provisional tax, and point out the tight weeks in advance. Book a discovery call to start.