In business, cash is king. Having the right amount of cash in the bank at any time means you’re able to stay on top of your liabilities, as well as continue to grow your business and take advantage of market opportunities. Here are some ideas on how to increase case flow in your company. 1. Working capital “Working capital” is the amount of money you have in the bank in order to facilitate the running of the business. It’s a delicate balance to decide how much to leave in the bank, as money in the bank is not being spent on growing the business. However, working capital works for you even when it’s in the bank by earning interest and…

Picture yourself at the beach. It’s a beautiful day, and you decide to go for a swim. You’re so busy enjoying the sunshine and the refreshing water, you don’t realise you’re drifting further and further from the shore. Little do you know you’re heading right into shark-infested waters. Being in business can be the same. Sometimes, you are focused on the day-to-day tasks and you miss the bigger picture. It can be difficult to see when you’re heading for trouble. But it’s important to know there are five huge warning signs pointing you to change before it’s too late. Sign 1: Your business cannot pay you a wage If your business is not generating a return to you, why are…

It is said your health is the most important asset you have. That’s why doctors advise us to conduct regular health checks on our bodies, ensuring we’re continuing to run at optimum efficiency and that our internal systems are all working properly. Regular health checks pick up early signs of issues before they become full-blown health problems that could endanger our lives. In the same way, a business health check can provide you with early warning of potential issues, especially to do with solvency. So how do you conduct a business health check? We’ve created this great checklist for you to use: Business health checklist Answer these questions truthfully with Yes/No. At the end of the list, add up your…

Most of us go into business because we want to make a decent living doing something we enjoy. We want to be able to provide for our families and enjoy the fruits from our efforts. One of the biggest mistakes business owners – particularly new business owners – make is confusing profit with revenue. Don’t assume just because the money is in your bank account, it’s available for you to use. As a business, you need to put your liabilities – debts, paying suppliers, payroll, tax obligations, etc – first. Remember that the money you take out of the business can’t be used for growth, and growing the business is what will allow you to continue to increase your personal…

Your business accountant is more than just the person who crunches the numbers in your business, he or she can be a valuable asset in helping you achieve your goals.  With modern cloud accounting tools like Xero and MYOB at your fingertips, keeping track of your finances is easier than ever, but the specialist advice, compliance, and reporting an accountant provides are still invaluable. Your accountant should be providing you with regular reports on different aspects of your finances. This isespecially important if your business is in trouble. Your accountant can alert you to the early signs that you might be struggling, and suggest what can be done to turn things around, before it’s too late. The important thing is to…

In the midst of financial difficulty, it can be hard to see a way out. Being insolvent means you’re not making enough money to pay your debts or you owe more money than the total value of your assets. Neither situation is ideal, but there are ways around it to avoid company liquidation, receivership or administration. Your best option is being upfront with your creditors. Trying to avoid them limits your options, and gives them more grounds to hire a debt collector or petition the court for your liquidation. A creditor compromise is an informal agreement between you and your creditors to either reduce your debt, or alter your payment plan to something you can afford. While a creditor’s compromise…

When financial difficulties strike it can seem like everyone needs answers all at once. If you have a company in financial trouble and need to buy some critical decision-making time to deal with your creditors, shareholders, and the IRD, you can place your company into voluntary administration. The aim of voluntary administration is a short-term freeze on your company’s financial position while an administrator and your creditors determine the future of your business. It’s a relatively new corporate rescue measure introduced through changes to the Companies Act (1993) in 2007. Voluntary administration: getting started To start voluntary administration proceedings, an administrator can be appointed by the board of directors, a liquidator, or by applying to the High Court. The administrator…

You need to wear a lot of hats to be in business. As a business owner you start out wearing many ‘hats’ as you take on all the work yourself. - Product or Service: What your business does. - Strategy: Where your is business going. - Structure: Protecting your business and assets. - Financials: Cash flow, profit and loss. - Marketing: Reaching your customers. - Sales: Closing deals with customers. - Personnel: Taking care of your team. - Operations: Oversight and management of the other sectors. When your business starts to grow, reaching the next stage will involve handing one of these hats to someone else. But which hat? What should you look for in a future business partner or…

In one of the final scenes of iconic movie Forrest Gump, Forrest discovers he’s a shareholder in “some kind of fruit company,” and that he “don’t have to worry about money no more.” He unwittingly bought shares in Apple Computers, and if for argument’s sake he’d spent $100,000 in 1977, his shares today would be worth close to $7 billion dollars. Of course, we all want to get as lucky as Forrest, but it’s pretty rare to blindly wander into a fortune. Becoming a shareholder can be a useful way to diversify your portfolio, and many people enjoy the experience. In our experience, many people in NZ become involved as a shareholder in a small company with a few other mates or…

According to the old saying, you should always ‘Expect the Unexpected!’ If so, wouldn’t that make the unexpected expected? As a company director or business owner you need to plan for the worst and hope for the best. Forecasts and predictions can help you plan for expected outcomes, but how do you prepare for the unexpected? This may take the form of a ‘Contingency Liability.’ If you know of a possible issue that may affect your company, what plans can you put in place to mitigate or minimise the risk? Examples of contingent liabilities include guarantee obligations, letters of credit, current or pending lawsuits, leases, tax assessments, performance bonds, hire purchase agreements and underwriting adjustments. A popular printing company’s motto…

The Inland Revenue Department has a formidable reputation. They have extensive investigative powers which can lead to substantial cost and increased tax risk if they decide to audit your business. You must comply with the IRD, but at the same time you can manage their process so they only receive relevant material with as little disruption to your day-to-day business. There are many reasons why the IRD might investigate your business: If you are not paying your GST / PAYE. An anonymous source may tip them off, your business’ name may come up in the course of another investigation, or they may decide you’re involved in a business with serious tax risks. Whatever reason the IRD decides, they don’t have…

A statutory demand can threaten your company’s very existence. Used to collect debt, they’re the most common form of evidence used in the High Court to support liquidating a company. Given how serious receiving a statutory demand is, it’s important to act fast and seek professional advice. If you do nothing, liquidation proceedings are virtually guaranteed. Pay Up A statutory demand requires payment of debts owing more than $1000 within 15 days. Time is not your friend. If you can settle the debt within that time period then you should be fine. It may still be worth seeking professional advice to see whether your creditor is abusing the statutory demand process, as there could be legal repercussions for them. Dispute Payment…