Funding it from cash flow: when waiting, or freeing up cash, beats borrowing

It’s an unusual thing for a second mortgage site to suggest, but it’s honest: sometimes the best alternative to borrowing is not borrowing. If the business can free up the money itself, or the need can wait, the home stays out of it and there’s nothing to repay.

Is the need urgent, or does it just feel urgent?

Start here. Some needs have hard deadlines: a tax debt with escalating consequences, a business purchase with a settlement date, a supplier who’ll stop supplying. Others feel urgent because they’ve been on the to-do list for a while: a fit-out refresh, a second vehicle, an expansion that would be nice this financial year.

Need	Hard deadline?	Could it wait or be staged?
ATO debt with enforcement action looming	Yes	Rarely
Business purchase with a contract date	Yes	No
Refurbishing the shop	Usually no	Often, in stages
Building stock for a season	Seasonal	Partly
Hiring ahead of growth	No	Often

If your need sits in the “could wait” column, self-funding deserves a serious look.

Which levers free up cash fastest?

business.gov.au’s guidance on improving cash flow sets out practical steps. The ones that most often release meaningful money are:

1. Collect what you’re owed. Invoice promptly, shorten payment terms for new work, follow up overdue accounts and consider deposits or progress payments.
2. Negotiate supplier terms. Longer terms with key suppliers move cash timing in your favour.
3. Review pricing. If margins have been squeezed by rising costs, a price review can lift cash flow without more sales.
4. Trim costs. Subscriptions, under-used services, insurance and utilities are worth a fresh look.
5. Manage stock. Keeping inventory lean frees cash that’s sitting on shelves.
6. Sell or lease idle assets. See selling an asset.

None of these is dramatic on its own. Together they can change what you need to borrow, or whether you need to at all.

How do you know if self-funding is realistic?

Build a simple forecast. business.gov.au’s cash flow statement template uses opening balance, money in, money out and closing balance month by month. Project forward six to twelve months, including tax, super and owner drawings, and ask:

• Is there a reliable monthly surplus?
• How many months of surplus would the need take?
• Would the levers above shorten that?
• What happens to the forecast in a slow month?

If the answer is “about four months of surplus, three with better collections,” waiting may well be the wiser path. Our guide to stress-testing before you borrow shows how to pressure-test the forecast.

When does waiting cost more than borrowing?

Waiting isn’t free. It’s the wrong choice when:

• Penalties or interest are accruing. ATO general interest charge compounds daily on unpaid tax, and from 1 July 2025 it’s no longer tax deductible.
• An opportunity will disappear. A seller won’t hold a business, a supplier discount ends, a contract goes to someone else.
• The problem grows while you wait. A supplier relationship deteriorates, or a key staff member leaves.

In those cases, borrowing, perhaps a smaller amount after using the levers above, may be the sensible route. You can check what’s realistic in a short enquiry with no credit check.

Can you stage the need?

Large needs can often be broken up:

• A fit-out done in two stages, the first funded from cash, the second once the first is paying off.
• Stock bought in two orders rather than one.
• A hire made part-time first, then full-time.

Staging reduces the amount at any one time and lets the business test the return before committing more.

Using cash-flow steps even when you borrow

Even if a second mortgage is the right answer, working through these levers first usually reduces the amount needed. A smaller loan means a bigger equity cushion, a simpler exit and less at stake for the household. See protecting the family home.

What does a self-funding plan look like on paper?

A self-funding plan is just a cash flow forecast with a target. Write down the amount you need and the date you’d ideally have it, then add a line to your monthly forecast for each lever you’re going to pull:

Lever	Example action	Monthly effect (illustrative)
Debtor collections	Invoice on completion, follow up at 7 and 14 days	Brings forward cash already earned
Supplier terms	Negotiate 45 days with two main suppliers	Delays outflows by a few weeks
Pricing	Review prices on slow-margin work	Lifts margin on each job
Costs	Cancel unused subscriptions, re-quote insurance	Small but permanent savings
Stock	Clear slow lines at a discount	One-off cash release

Then set aside the freed-up cash in a separate account so it isn’t absorbed by day-to-day spending. Review progress monthly. If you’re on track, you’ve avoided a loan entirely. If you’re behind, you’ll know early, and you’ll know exactly how much smaller the loan needs to be.

An honest second opinion

If you’re not sure whether to borrow or wait, describe the need and its deadline in a short enquiry. One specialist will give you a straight view, including whether you’d be better off holding off or borrowing less. No credit check is involved at the enquiry stage, and your details aren’t sent out to a list of lenders. Please be accurate about the deadline and your monthly cash position, because those decide the answer.

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