One Big Tip to Improve Business Cash Flow
- Chow Ping
- 1 day ago
- 3 min read
You know what's worse than not having enough cash in your business?
Having the cash... but watching it drain away to pay taxes on money you haven't even received yet.
Yet we see this expensive mistake all the time. And we've been in the tax & audit business for 32 years.
Today, we're exposing the cash flow killer that most business owners don't even know they're triggering.
And we'll show you exactly how to fix it.
Ever experienced this?
Here's how it usually goes:
You land a big project. You're pumped. The client's pumped.
Client asks: "Can you send me an invoice?"
You, wanting to look professional and on top of things, fire it off immediately.
Project's scheduled for three months from now. Maybe even next year.
The money will not be in your account any time soon.
But you issue the invoice all the same.
The money doesn’t show up (at least not yet).
But you know what shows up right on time?
Your tax bill.
Because the second you hit "send" on that invoice, you triggered a tax liability.
Doesn't matter if your bank account says RM0.
Doesn't matter if the client hasn't paid you a single sen.
You're paying corporate tax (17-24%) and SST (8%, if applicable) on money that's chilling in your client's bank account, not yours.
😢
We get it
There are legit reasons this keeps happening.
You want to look professional. Invoice ready = organized business owner who knows what they're doing.
You assumed tax gets paid when the money comes in.
Sadly, that’s not the case. Tax is triggered the moment you issue that invoice.
Invoicing = Immediate tax liability
And that definitely doesn't improve business cash flow.
The One Big Tip To Improve Business Cash Flow:
What's On Paper Must Match What's In Your Bank Account.
Your accounts should show what's actually happening, not what you hope will happen.
This simple principle protects you from two expensive cash flow mistakes:
Mistake #1: Showing income you haven't received yet (invoicing too early)
Mistake #2: Showing income you'll never receive (keeping bad debts around)
Both violations cost you real money in unnecessary taxes.
Let's break them down:
Mistake #1: Invoicing too early (money you don't have YET)
Say it’s October 2025 (which is when we’re writing this). You issue an invoice for work that won't even start until late 2026.
What happens next?
That amount gets slapped onto your 2025 taxable income
You pay corporate tax on it in 2026 (for 2025's "profits")
If your business is registered for SST, you're required to pay 8% of that invoice amount to the government within two months.
It’s cash flowing out of your business for a project that's literally a year away!
Want to focus on your business without the compliance headaches? We've got you. WhatsApp us now. Let's chat!
Mistake #2: Keeping bad debts around (money you'll NEVER get)
Remember that client who swore they'd pay "next month"... two years ago?
Still sitting pretty in your accounts receivable?
That guy sucks. And unfortunately, he’s not coming back. That "asset" is worthless. And if you don’t write it off your books, your accounts make it look like profit.
Profit that never happened.
It’s good practice to review your balance sheet regularly. Boot out anything that's actually worthless.
A Secondary Tip to Improve Business Cash Flow -
Invoice the Right Way
Here's how to invoice without losing money:
Step 1: Send a proforma invoice first
Think of it as a fancy quotation with all the official details. It shows:
What you're delivering
How much it cost
Payment terms
Everything the client needs to see
But — and this is the important bit — it doesn't trigger your tax.
You look like you've got your act together. Client gets clarity. Your cash stays put.
Win-win-win.
Step 2: Only send the real invoice when:
✅ Work's done, OR
✅ Payment is confirmed/already in your account, OR
✅ You're damn sure the money's coming soon
Don't rush it just to seem efficient.
Step 3: Be strategic about timing
Financial year-end coming up? Think about pushing some invoices to next year.
You're not dodging taxes — you're just being smart about when you trigger them.
Smooths out your revenue, helps manage cash flow, keeps you sane.
When you're running a business, you're doing seventeen things at once
Operations. Sales. Hiring. Firefighting. Customer drama. Supplier issues. Fighting with the printer.
Accouting is so not your priority. That’s why you need someone experienced to handle it for you. Someone like us!
Want to focus on your business while we manage the boring paperwork for you? We've got you. Click here to book a free consultancy call.
Or if you prefer WhatsApp...
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