Six simple ways to improve your cashflow

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Small businesses live and die by cashflow – it’s your lifeblood as a business owner. With several Inland Revenue bills to pay around this time, it’s the perfect opportunity to drum up a little extra money. Here are six quick ways to help improve your cashflow:

1. Chase those outstanding invoices

Follow up on invoices that need to be paid – send emails and call your customers and try to get that money in.

2. Change your payment terms

Even if it’s only for new customers, reduce your payment times and think about introducing part payments up front. One of our clients who makes e-learning modules recently switched to 30% upfront, 60% on delivery and 10% on completion of all the changes – she’s no longer waiting for a client to finally sign off before she can get paid after months of work.

3. Make it easy for your customers to pay you

Can you sign your clients up for direct debit payments? Can you accept credit cards? Is there a prompt payment discount that would help get the money in sooner? Consider all the barriers that might prevent your customers from paying you and see if you can go some way to breaking them down.

4. Analyse your regular payments

We’ve all forgotten to cancel subscriptions – it’s so easy to do. Make sure your company isn’t paying outdated subscriptions, paying too much for utilities or paying for online software that’s not good value. Shop around and see if you can cut your costs.

5. Put your prices up

If you can put your prices up, this is the best and easiest way to boost your business’s income. Investigate what your competitors charge and don’t underrate your skills – this is so common with Kiwi business owners. We have many clients who think that because they’re small or their overheads are low, they can’t charge much. We help them see the value they provide, and how rare this quality can be in a small country like New Zealand. You’re worth it!

6. Analyse and forecast your cashflow

Sort out your cashflow before it becomes critical by first knowing where your cash is coming from and what you’re spending it on. Like your personal finance, knowing what you earn and how you spend it is vital for accurate budgeting. Then we can help you create a cashflow forecast so you’re not left floundering when you need to pay your GST or provisional tax. Forecasting your income will help you manage your money and prevent cashflow problems from slowing down the business.  

Get ready for March 31

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As far as your accounts go, this is the biggest month of the year. The end of March is the end of the financial year for most businesses, so it’s time to get everything organised so we can get all your compliance sorted as quickly as possible

What do you need to do to make your accounts run more smoothly? A few simple things will ensure a hassle-free process:

  • Reconcile all your transactions in accounting your system.
  • Make sure you’ve sent out all your invoices for the year.
  • PDF a copy of all March bank statements including loans and credit card statements to us.
  • Gather any hire purchase documents and send them through
  • Are you paying bonuses? There are rules about when they need to be paid in order to claim a deduction this year, so let us know if you’re going to hand out a bonus – including shareholder drawings.
  • Work out the value of the stock on March 31.
  • Have you sold or thrown out any assets? Let us know so we can write them off.
  • Have you purchased any assets? Please ensure you include all details with your records i.e. what was purchased, when and for how much.
  • Consider writing off any bad debts – if you’re really not going to see the money, you can at least make it tax deductible.

So what are we going to do once we’ve got all that information? This is our busiest time of year – collecting, reviewing and analysing all your accounts. Here are a few of the jobs for the SME team at the end of the financial year:

  • Check your accounts are reconciled.
  • Figure out where those incorrectly coded transactions should really go.
  • Make sure you’ve paid the right amount of GST.
  • Run your depreciation.
  • Adjust your profit for non-deductibles.
  • Make sure you’ve completed your annual return and that your shareholdings match up.
  • Decide on a tax strategy for your business – we try to make sure you’re not paying even a dollar more tax than you need to, but also to check you’re not underpaying.
  • Complete your tax return and file it electronically with Inland Revenue.

We know that accounts and tax aren’t the fun part of being in business. But it’s well worth investing a chunk of your time this month in getting them right. It will help us to give you the best going forward. For more details on what you can do, or what we can do for you, give us a call on 09 366 7025.

The lazy Kiwi's guide to goal-setting for 2018

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What is your business going to achieve this year? You know you should set goals and follow them through. Ideally, you’re supposed to set SMART goals: specific, measurable, achievable, realistic and time-bound. But that can feel like an onerous task all on its own – one that keeps slipping to the bottom of the to-do list. Having several major goals can also be daunting; where do you start? If you can’t get started, you’ll never get finished.

Sometimes, you can set a really simple goal that will still be inspiring. We believe that most Kiwi business owners don’t set annual goals beyond their usual monthly KPIs, and plenty don’t set those. If you fall into that category, what about a mini goal? We think every Kiwi business owner can set a mini goal that can help you stay on track, keep focused and improve your performance in 2018.

Here are some of the simple goals our clients have set that they’ve told us have actually worked for them:

  • "Have a record month this year” – the client who set this goal ultimately had two months in 2017 that were 10% better than any single month she’d had in 2016.
  • “Get rid of that problem customer” – sounds negative, we know, but we’ve recently had a client who had been dealing with a nightmare customer for years, afraid to give up the regular sales. But as soon as the customer was gone, the client was so much less stressed out that he immediately made up the missing profits in new work. And he continues to feel less stressed because that difficult customer isn’t his problem any more.
  • “Find a cheaper/easier/faster way to do that annoying job” – this can be technology, outsourcing or just being more efficient. One of our clients decided in 2016, with a hint from us, that he was finally ditching paper invoices. Straight onto Xero, emailed invoices, his customers are happy and he’s saving his business at least $200 each month.
  • “Get the right advice” – so many small New Zealand businesses are run by people who seem allergic to getting in an expert on tricky topics. Last year one big client employed a freelance technical writer to work on their bids and it was both cheaper and easier than they could have imagined. They got more work, took a load of stress off their people and streamlined their whole bid-writing process. Win.

Don’t forget that a goal is usually just a tool to point you in the right direction. There are other ways to do that, too, including talking to one of the team at SME to figure out what’s important in your business – and your life.

What will change for small businesses under Labour?

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What will change for small businesses under Labour?

What will the new government mean for small businesses in New Zealand? Here are some of the proposed changes and how they might have an impact on your small business:

The minimum wage is going up

The current minimum wage is $15.75 an hour for adults – that’s been forecast to go up to $16.50. This may increase your costs. NZ First has a policy that would increase minimum wage to $20 gradually over the next three years. Clients are already asking us to analyse how this will impact their profits.

New workplace relations laws

Labour plans to replace what they call National’s “fire at will” policy with “fair trial policies”. (Although I don’t know how many employers would describe the current situation as a “fire at will” environment.) Labour plans to encourage the living wage, tweak the Equal Pay Act and introduce fair pay agreements – more here.

Paid parental leave is increasing

Currently at 18 weeks, Jacinda Ardern has promised to raise paid parental leave to 26 weeks. This is great for parents, although it can affect productivity for employers.

Immigration numbers are tightening up

If your business struggles to find local workers and relies on immigrants, you could find you have a smaller pool of people when it comes to employment. This is particularly common in hospitality and seasonal work. If you’re going to need international workers soon, move quickly before these changes are put in place.

Secondary tax will be eliminated

Labour’s tax policy includes getting rid of secondary tax, which helps prevent people with two jobs being overtaxed during the year. If you and/or your employees have two jobs (and 75,000 Kiwis do), this is going to make life simpler and reduce accounting costs.

 Apprenticeships for the unemployed

If you need an apprentice, it could soon be easier. The ‘Dole for Apprenticeship’ scheme will subsidise employers who are willing to take on a full-time apprentice who is currently unemployed.

Tax credits for R & D

Undertaking research and development? You could get a tax credit at 12.5%. Could be a super idea.

A young entrepreneur policy

Labour’s Young Entrepreneurs Plan would let any Kiwi aged 18 to 23 apply for up to $20,000 to start a new business with a great idea.

A new tourism and infrastructure fund

A $75 million fund has been promised, which will pay for projects to “improve the experience of visitors to New Zealand and enhance our natural environment”. If your business relies on tourists, this could be good new for you.

That’s a taster of what we’re likely to see over the new few years – depending on your business, you may need to plan for changes. We can help with most of changes, and we’ve already started looking at the impact they will have on a range of companies, so give us a call if you have any questions.

Finding funding for your small business

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Has your business reached the point where you need extra funding? It could be that you’re launching a new product, expanding your market overseas, taking on new staff members or buying more equipment. To get over the immediate hurdle and make that jump to the next level, you need to find some money. There are lots of different ways to fund your small business’s growth, including:

  • A loan from the bank, probably the most common type of funding
  • Angel investors
  • Peer-to-peer lending
  • Private equity investment or venture capital  
  • Grants from an organisation like your Regional Business Partner Network
  • Incubators and accelerators like those offered by Callaghan Innovation
  • A loan or gift from friends or family (common, but not recommended)
  • Crowdfunding
  • Shark Tank or Dragon’s Den – or New Zealand’s own Supersize SME (like the name)

All these options have different pros and cons, but they all have one thing in common: they want to know more about your business and that includes clear financial data. You might pitch them all slightly differently, but every one of these avenues will need the right set of financials targeted to help them see a path to a mutually successful loan, grant or investment. You need to set out a compelling business case and that will rely heavily on financial and sales data, plus research into your market.

Not only can your virtual CFO provide you with the right information to show a prospective lender how good you look, but we can also help you talk to various lenders and agencies to present your business in the best financial light. In addition, sometimes your virtual CFO will be able to find funding options for you. A great CFO will help to forge the connections you need to find the money for growth. (It’s also helpful to have someone on your side when seeking funding to avoid being caught out by one of New Zealand’s surprisingly prevalent grant scams.)

If your business is aiming to make that jump to the next level, you probably don’t want to take on a full-time CFO. But a virtual CFO can step in and help out with a regular financial check-in as well as case by case when you’re presenting your business to a prospective investor. If that sounds like it could be useful, give us a call and we can help. Let us shine a spotlight on your business success – and find the funding you need to take that leap.