Short answer. New-company cash flow problems usually come from late customer payments, forgotten statutory outflows such as CP204 instalments, SST and payroll remittances, and spending ahead of income. Build a rolling 12-month forecast, put every statutory date in it, invoice promptly, and keep company and personal money separate.
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In this article
- Profit is not cash
- The main causes, and the fix for each
- The statutory cash calendar most forecasts miss
- How to build a 12-month cash flow forecast
- Worked example (illustrative)
- Practical levers when the forecast dips
- Use management accounts, not just the bank balance
- Common cash flow mistakes
- What this means for different businesses
- How Axecta helps
- Next steps
- Frequently asked questions
Profit is not cash
A new Sdn Bhd can show a profit on paper and still be unable to pay its landlord. Profit counts a sale when you invoice; cash counts it when the customer pays. Costs work in reverse: rent, salaries and statutory payments leave the bank on fixed dates whether or not customers have paid. The gap between those two timelines is the cash flow problem, and in the first year it is wider because there is no cushion of past receipts.
This guide explains where new-company cash flow actually leaks, how to build a forecast that includes the statutory dates most founders forget, and what to do when the forecast turns negative. It uses figures only from official pages; where a rate depends on your situation, we say so.
The main causes, and the fix for each
| Cause | Why it happens in year one | What to do |
|---|---|---|
| Customers pay late | No credit control; invoices sent weeks after the work | Invoice on delivery, state terms in writing, follow up on day one overdue |
| Tax instalments surprise you | CP204 starts in the 6th month for a new company | Put the instalments into the forecast from the day you submit the estimate |
| Payroll and contributions | Salary is paid monthly; employer contributions follow | Forecast the full cost of each employee, not only the salary |
| SST, if registered | Return and payment are periodic | Hold the tax collected in a separate bucket |
| Spending ahead of income | Fit-out, stock, subscriptions bought on optimism | Release spending in stages against received cash |
| Mixed personal and company money | Owner draws are unrecorded | See separating finances |
| Poor records | Books updated once a year | Close the books monthly |
The statutory cash calendar most forecasts miss
Need this done for you? Axecta’s compliance health check team can handle this for your company. See the compliance health check service.
These are the outflows the official pages put on a fixed schedule. Each must appear as a line in your forecast.
| Outflow | Rule | Source |
|---|---|---|
| CP204 instalments | Equal monthly instalments, due on the 15th; for a new company they start in the 6th month of the basis period (s107C(6)); existing companies start in the 2nd month | LHDN |
| Form C | Due within 7 months after the close of the accounting period; plan for any balance of tax your computation shows (confirm payment timing with LHDN) | LHDN company page |
| PCB (monthly tax deduction) | Remit on or before the 15th of the following month | LHDN employer page |
| SST-02 | Bimonthly return, due the last day of the following month; nil returns are required | Customs |
| EPF, SOCSO, EIS | Contribution rates and payment dates are set by KWSP and PERKESO; confirm on their current pages before forecasting | KWSP, PERKESO |
| Audit and secretarial fees | Annual; negotiate timing | Your providers |
If you are unsure how tax and instalments interact, read when corporate tax is payable and the CP204 guide.
How to build a 12-month cash flow forecast
- Start with the bank balance on the first day of the forecast, not the profit figure.
- List expected receipts by month, using the date customers will pay, not the date you invoice. If your customers take 45 days, the sale in January is February’s cash.
- List fixed costs: rent, salaries, insurance, software, loan repayments.
- Add variable costs as a percentage of sales where possible.
- Add statutory payments from the calendar above: CP204 instalments, PCB, contributions, SST.
- Add one-off items: deposits, equipment, annual fees, audit.
- Compute the closing balance each month and mark any month below your minimum comfortable balance.
- Re-forecast monthly with actuals, and roll the window forward.
The CP204 estimate and the forecast should be consistent: if your forecast shows weak profits, your tax estimate should reflect that, and you can revise the estimate in the 6th, 9th or 11th month using e-CP204A. Do not under-estimate simply to ease cash flow: section 107C(3) sets an 85% minimum for the estimate, so check the current wording on the LHDN page before you choose a figure.
Worked example (illustrative)
A new services company starts on 1 January with RM100,000 in the bank, and the figures below are round numbers for illustration only.
| Item | Monthly figure |
|---|---|
| Invoices raised | RM40,000 from month 1 |
| Customer payment delay | 60 days |
| Rent, salaries and overheads | RM35,000 |
Because customers pay after 60 days, cash receipts are zero in months 1 and 2 and RM40,000 a month from month 3. Costs of RM35,000 leave the account every month. The balance falls from RM100,000 to RM30,000 by the end of month 2 ((RM100,000 – 2 x RM35,000)), recovers by RM5,000 a month from month 3 (receipts of RM40,000 less costs of RM35,000), and shows a profit throughout. Now add a tax estimate of RM30,000 for the year. As a new company, the instalments run from month 6 to month 12: seven payments of about RM4,286 (RM30,000 / 7, with the fractional remainder in the final one, per LHDN). The company’s cushion is thin: instalments eat most of the RM5,000 monthly surplus.
The lesson: a profitable company can run close to zero because of the 60-day delay. Shortening it to 30 days releases a month of receipts; lowering it by invoicing earlier is the cheapest fix available.
Practical levers when the forecast dips
Speed up money in
- Invoice on the day of delivery. For e-invoicing rules, check whether your Sdn Bhd needs e-invoicing; the LHDN phases are by turnover, exempt below RM3,000,000.
- Ask for deposits or milestone payments on larger jobs.
- Chase on the due date, not the next month.
- Know your top three debtors and watch them weekly.
Slow money out, legitimately
- Negotiate supplier terms rather than paying late without notice.
- Never delay statutory payments to protect cash: penalties and, for tax, enforcement follow. For SST, see SST mistakes and late-payment penalties.
- Phase hiring against received cash. See when to hire your first employee.
Fund the gap properly
- A director advance is fine if it is documented as a loan from the director to the company. A loan from the company to a director is restricted by section 224 of the Companies Act, with a stated penalty on conviction of up to five years’ imprisonment or a fine up to RM3 million for the authorising director, subject to exceptions such as exempt private companies. Never use company cash for personal needs without advice.
- Compare any financing by the total repayment burden, not just the rate. Bank and financing terms are provider-specific; we do not quote rates here.
Use management accounts, not just the bank balance
The bank balance tells you where you are today. Monthly management accounts show what you owe, what you are owed and whether margins are healthy. Section 245 of the Companies Act already requires records that sufficiently explain the company’s transactions, with entries within sixty days; monthly closing makes the numbers usable for decisions instead of only for filing. See monthly bookkeeping vs annual accounts and accounting records ready for e-invoicing.
Common cash flow mistakes
- Forecasting profit and calling it cash.
- Leaving CP204 out of the forecast, then finding seven instalments starting in month six.
- Treating collected SST as the company’s money.
- Paying owners informally and not recording it.
- Forecasting once, never updating.
- Signing a long lease or hire commitment before the first payment cycle is proven.
- Ignoring a late-paying anchor customer who represents most of sales.
What this means for different businesses
- Sdn Bhd with one big customer: concentration risk. Forecast a scenario where the main customer pays 30 days later.
- Seasonal business: forecast the whole year including low months and reserve for them.
- Foreign-owned start-up: capital injections should be recorded as share capital or shareholder loans so the bank and auditor can follow them. See how much capital a Sdn Bhd needs.
- Sole proprietor: you file Form B (due 30 June) and the tax falls on you personally, so reserve for it monthly. See sole proprietor tax Form B.
How Axecta helps
Axecta’s accounting team can close your books monthly, reconcile the bank and produce management accounts, so the forecast uses real numbers. For startups that are not sure which statutory dates apply, our compliance review produces the cash calendar above for your company.
Next steps
- Download your last three bank statements and list real receipt delays.
- Build the 12-month forecast with the statutory lines included.
- Set a minimum cash balance and a trigger for action.
- Review actual vs forecast on the same day each month.
- Talk to your accountant before any large commitment.
Frequently asked questions
Why do profitable new companies run out of cash?
Because profit is recorded when you invoice, but cash arrives when customers pay, while rent, salaries and statutory payments leave on fixed dates. A 60-day customer delay can drain months of working capital even in a profitable business. A forecast shows the gap before it bites.
How often should I update my cash flow forecast?
Monthly at the least, replacing forecast figures with actuals and rolling the window forward. In the first year, or when cash is tight, review weekly. Update immediately after a large new contract, a hire, or a change in customer payment behaviour.
Do CP204 instalments affect cash flow?
Yes. LHDN states that instalments are equal monthly payments due on the 15th. A new company’s instalments start in the 6th month of the basis period, and the estimate can be revised in months 6, 9 or 11. Include them in the forecast.
When is SST paid?
Registered businesses file SST-02 bimonthly, due the last day of the month following the taxable period, and nil returns are required. Hold collected SST separately so it is not spent. Confirm your taxable period and rate on the Customs MySST pages.
Should I take a loan to fix cash flow?
Only after you understand the total repayment burden and whether the shortfall is temporary. Financing terms are provider-specific, so compare offers in writing. If the cause is late customers, fix invoicing and collection first; debt on top of a broken cycle makes it worse.
Can the company lend money to its director?
Generally no. Section 224 of the Companies Act 2016 prohibits loans to directors, with exceptions such as exempt private companies and approved expenditure funding. Contravention can be an offence for the authorising director. Take advice before any transaction and document everything.
How can I get customers to pay faster?
Invoice on delivery, state payment terms on the invoice and contract, ask for deposits, and follow up the day an invoice is overdue. Know your top debtors by name. Where you must issue e-invoices, issue them promptly so there is no delay on your side.
What belongs in a startup cash flow forecast?
Opening bank balance, receipts by expected payment date, fixed and variable costs, payroll and statutory contributions, CP204 instalments, SST if registered, one-off items and the closing balance each month. Add a note of assumptions so you can see which one broke when actuals differ.
Who can set up my forecast and management accounts?
Your in-house bookkeeper, outsourced accountant or an accounting firm such as Axecta can do it. What matters is monthly closing and a forecast that includes statutory dates. Ask for a sample report before engaging anyone.
Want a cash flow view you can trust?
Axecta Management Services is a full-suite accounting, company secretarial and consulting firm in Kuala Lumpur, serving companies from SMEs to MNCs.
Ask Axecta about management accounts
Keep reading
- Separating Personal and Business Finances in a Sdn Bhd
- First-Year Compliance Checklist for a New Sdn Bhd in Malaysia
- When Is Corporate Tax Payable in Malaysia?
- When to Hire Your First Employee in Malaysia: Timing, Cost and Set-Up
- Common Company Setup Mistakes in Malaysia and How to Avoid Them
- SST Late Filing and Payment Penalties in Malaysia: Rates, Offences and How to Fix a Miss
- Starting a Business: Common Challenges: the full guide
Official sources to check
This article is general information and not legal, tax or accounting advice for your company. Rates, thresholds, deadlines and procedures change, so confirm current requirements with the sources above or with Axecta.