The story in one minute
- In FY2026 Riverbend built a new clubhouse with grants and a $70,000 loan.
- In FY2027 the clubhouse cost more to run than the club earned: a loss of $48,880, and trading could not cover the loan repayments.
- The bank still showed $46,370, so on the surface all looked well.
- The committee acted: a $30,000 members’ levy and price rises in FY2028, and a $40,000 solar grant in FY2029.
- FY2028 is still tight, but the club recovers: by FY2030 it makes a surplus of $25,925 and holds $122,575 in cash.
⚠ A fictional club, real arithmetic
This club is fictional, built from patterns common in Queensland clubs. Every figure in this chapter comes from the BusinessSolvency calculation engine. FY2025–FY2027 are the “actual” years; FY2028–FY2030 are the forecast, marked (F). General information only, not financial or legal advice.
In short: a volunteer-run Queensland sporting club, about $320,000 a year in revenue, paying no income tax.
Riverbend Sports & Recreation Association Inc is a fictional incorporated association in Queensland. A volunteer committee runs it. It earns about $320,000 a year from member fees, the canteen and bar, and hall hire, and pays wages of between $82,000 and $104,000 a year. As a community sporting club, it is income tax exempt.
Because its revenue is between $150,000 and $500,000, it is a medium association under Queensland rules, so its accounts are audited or verified each year before the AGM (Chapter 2C.4). Its committee members carry the Queensland duty not to let the association take on debts it cannot pay (Chapter 2B.3).
In short: cash fell for three years in a row, then the committee’s plan turned it around.
Riverbend: cash at the end of each year
FY2025–FY2027 actual, FY2028–FY2030 forecast (shaded). The bank never went into overdraft, which is exactly why the trouble was easy to miss.
In short: a grant and a loan built the clubhouse; nothing paid to run it, and by FY2027 the club was losing money while the bank balance still looked fine.
A good year. Revenue of $318,000 left a surplus of $24,570. The club received a $120,000 grant towards a new clubhouse, so cash closed at $143,570. That cash looked like savings, but most of it was tied to the building.
The club spent $260,000 on the clubhouse, paid for with the first grant, a further $100,000 grant and a $70,000 loan. Revenue edged up to $326,000, but the surplus shrank to $3,180 as depreciation and interest rose. Cash fell to $76,450. Counting everything paid out, including the building, revenue was $77,276 short of what the club needed to pay its way.
The first full year of running the new building. Wages rose from $86,000 to $104,000 and insurance from $15,500 to $19,000, while revenue fell 4.3% to $312,000. The club made a loss of $48,880. Trading brought in no cash at all (−$18,080), so it could not cover its $7,000 of loan repayments from trading. Suppliers were being paid more slowly, too.
Yet the bank still showed $46,370. On the surface, all looked well.
In short: BusinessSolvency flagged the problem in FY2026 and FY2027, while the bank balance still looked fine.
- FY2026: revenue short of the Sustainable Cashflow target by $77,276. Easy to explain away as “the building year”.
- FY2027: a loss of $48,880; trading cash could not cover the loan repayments (loan cover −1.61, where anything under 1 means the repayments are not covered); revenue still $34,338 short of the target.
- The trap: cash of $46,370. Without a forecast, the committee could easily have waited another season.
Watch out
Riverbend’s bank balance never went negative. The warning came from the forecast and the loan cover, not from the bank. This is money trap 6 in Chapter 2B.4: the new facility that nothing pays to run.
In short: a levy, price rises and a solar grant: FY2028 is still tight, but the club recovers in FY2029 and FY2030.
The committee’s plan: a one-off $30,000 members’ levy, fee and price rises that lift revenue 14% to $355,680, and wages brought back to $90,000. The loss shrinks to $1,920 and cash recovers to $66,957. The club pays its way, but only because of the levy. It also sets aside $24,358 to start a cash reserve of one month’s running costs. Before that, trading cash of $25,945 covers the $7,000 loan repayments; after it, loan cover shows only 0.15, because part of the reserve is paid for by the levy rather than by trading. A levy can be asked for once; it cannot be relied on every year.
A $40,000 solar grant pays for panels on the clubhouse roof, and running costs fall. Revenue grows 7% to $380,578, and the club makes a surplus of $16,946. Trading cash now covers the loan repayments comfortably (loan cover 4.42). Cash rises to $104,565.
Revenue grows 6% to $403,413, ahead of 4% inflation, with no levy and no grant. The surplus is $25,925 and cash reaches $122,575, with a further $50,331 now held in a separate cash reserve: two months’ running costs.
In short: look at next year’s cash, not today’s bank balance, and act while the fix is small.
- Plan the running costs, not just the building. A grant and a loan paid for the clubhouse; nothing was planned to pay for running it.
- A healthy bank balance can hide a loss. Cash of $46,370 at the end of FY2027 hid a $48,880 loss.
- A levy buys time; it does not fix the problem. FY2028 only pays its way because of the levy. The real fix is prices and costs that cover the running of the club every year.
- Acting early kept the choices cheap. The committee did not borrow to cover running costs, and the club never went into overdraft.
- Minute it. The forecast, the plan and the committee’s decision, recorded at the meeting, are the record that could show the committee had reasonable grounds to expect the club could pay its debts (Chapter 2B.3).
Remember this
The BusinessSolvency score for Riverbend’s three actual years is 17 out of 100. With the committee’s plan, the forecast score is 67, Caution, held there because in FY2028 trading cash alone does not cover the loan repayments (DSCR 0.15x; the $30,000 levy carries the year). Every other test is met, and the 3-Year Sustainable Cashflow badge is achieved. The difference is the committee acting in time; the FY2028 loan cover is what to watch (3.9).
The key figures for all six years, straight from the BusinessSolvency calculation engine. Committee members can stop here, or read on.
In short: every key figure for FY2025–FY2030 in one table, with the cash movements and the solvency ratios year by year.
| Figure | FY2025 | FY2026 | FY2027 | FY2028 (F) | FY2029 (F) | FY2030 (F) |
|---|---|---|---|---|---|---|
| Revenue | $318,000 | $326,000 | $312,000 | $355,680 | $380,578 | $403,413 |
| Surplus or deficit (Net Income) | $24,570 | $3,180 | −$48,880 | −$1,920 | $16,946 | $25,925 |
| Trading cash (operating cash flow) | $38,570 | $29,880 | −$18,080 | $1,587 | $44,608 | $29,010 |
| of which set aside into the cash reserve | $0 | $0 | $0 | −$24,358 | $0 | −$25,973 |
| Spent on equipment and buildings | −$15,000 | −$260,000 | −$5,000 | −$4,000 | −$40,000 | −$4,000 |
| New borrowing | $0 | $70,000 | $0 | $0 | $0 | $0 |
| Loan repayments | $0 | −$7,000 | −$7,000 | −$7,000 | −$7,000 | −$7,000 |
| Levies, grants and appeals | $120,000 | $100,000 | $0 | $30,000 | $40,000 | $0 |
| Cash at start of year | $0 | $143,570 | $76,450 | $46,370 | $66,957 | $104,565 |
| Cash at year end | $143,570 | $76,450 | $46,370 | $66,957 | $104,565 | $122,575 |
| Cash reserve held (a separate asset) | $0 | $0 | $0 | $24,358 | $24,358 | $50,331 |
| Short-term loans | $0 | $0 | $0 | $0 | $0 | $0 |
| Long-term debt | $0 | $63,000 | $56,000 | $49,000 | $42,000 | $35,000 |
| Suppliers owed (trade creditors) | $9,000 | $10,000 | $16,000 | $12,000 | $12,000 | $12,000 |
| Sustainable Cashflow target: revenue above (+) or below (−) it | +$164,821 | −$77,276 | −$34,338 | +$23,561 | +$43,201 | +$20,708 |
| Loan cover (DSCR): trading cash ÷ loan repayments | no loan | 3.15 | −1.61 | 0.15 | 4.42 | 3.05 |
| Current Ratio: short-term assets ÷ short-term debts | 12.88 | 6.66 | 3.10 | 5.94 | 10.03 | 14.12 |
- Tax: 0%, as an exempt sporting club (Chapter 2C.3).
- Cash check: each year’s cash at year end equals cash at the start of the year, plus trading cash, less equipment and buildings, plus or minus the financing lines above; and each year starts with the previous year’s closing cash. It agrees to the dollar in all six years.
- The first actual year starts with an opening cash balance of $0 in BusinessSolvency, so FY2025’s cash is built up within the year.
- The cash reserve: money set aside into the reserve is taken out of trading cash and held as a separate asset, so “cash at year end” is the cash left free after the reserve. Both are shown. In FY2028, trading cash before the reserve was $25,945, which covers the $7,000 loan repayments about 3.7 times; after $24,358 was set aside, loan cover shows only 0.15.
- The Sustainable Cashflow target counts every cash payment, including equipment, buildings and loan repayments, and counts levies, grants and borrowing as cash in. That is why FY2028 meets the target only because of the $30,000 levy (Chapter 3).
- Forecast assumptions: revenue growth of 14%, 7% and 6% in FY2028–FY2030; wages, insurance and overheads as set by the committee’s budget; a reserve target of one month’s running costs, rising to two in FY2030.
- Scores: the BusinessSolvency score is 17 out of 100 for the actual years and 90 for the forecast.
- See it live: during alpha testing, request access to open this club’s forecast in the BusinessSolvency app.