As New Zealand starts to shut down in December, and continues in holiday mode for most of the rest of January, cash is often very tight for businesses. When this is coupled with provisional tax and GST payments due for most on the 15th of Jan it can get quite tight. Unfortunately, we tend to splash out on staff parties and gifts at Christmas, and there is always the looming expectation that cash will not be flowing in over the holiday period. This can cause a cashflow crisis around this time of the year and into the New Year. Plus the fact that our debtors are experiencing similar cashflow problems could push out their payments beyond the normal trading cycle.
Greenlion has some tips on improving your cashflow to alleviate New Year cashflow problems, beginning with chasing outstanding invoices. You need to follow up on invoices that need to be paid – send emails and call your customers and try to get that money in. You also need to reduce your payment times, and think about introducing part payments up front.
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.
Finally, 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.
Greenlion 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, so for more information on chartered accountants Auckland and bold financial leaders please go to https://www.greenlion.co.nz .