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Which is more important? Cashflow or profit?

Cashflow and profit are two of the most important financial metrics for any business. But while they’re both related to the financial performance of a company, they measure different things.Knowing the difference – and how cash and profit contribute to your success story – is a vital skill if you want your business to have the best possible financial health.The difference between cashflow and profitUnderstanding the technicalities of financial reporting can be daunting as a new entrepreneu...

How to get employee remuneration right in NZ

For most people, earning money is a principal reason to go to work. It’s also one of the easiest ways for them to measure themselves and their achievements.Remuneration (how you pay and reward your people) can get left on the shelf, due to financial reasons or because constructing competitive pay packages can take a lot of effort. But there are risks to getting pay wrong, from potential legal issues to the damage it can do to employee motivation and retention, and the company’s reputation.Wh...

Getting your bookkeeping ready for a digital future

Keeping up-to-date records of your business transactions isn't the most glamorous part of being an entrepreneur, that’s for sure. But, in reality, having accurate and up-to-date bookkeeping is actually one of the core ways to keep your finances (and your business) under controlDigital bookkeeping is the future of your financeThe digital age has revolutionised the way many business owners carry out their bookkeeping. From digital accounting to real-time data, the modern bookkeeper is now equipp...

Cash flow forecasting puts you back in control

We all know that positive cashflow is the beating heart of any successful business. And with so many external pressures on your cash right now, it’s important to have one eye on the future.Cashflow forecasting is an increasingly important tool for any finance team. With a better view of your future cashflow position, you can make well-informed decisions about your finances.But how does cashflow forecasting work? And how does it help you maintain a positive cashflow position throughout the year...

Using data analytics to give your business a competitive advantage

Data analytics is rapidly changing the way businesses are operated. By making use of your financial and non-financial data, you can quickly start to gain a deeper insight into your operations, performance and financial management.Data-driven decisions are quickly becoming the norm, for even the smallest business. Data analytics allows helps you spot the patterns. Understand the data trends. And preview the upcoming threats and opportunities for improvement.Taking a deep dive into your dataData a...

Getting more from your procurement spending

Keeping the wheels of your business turning can be expensive. As part of your ongoing business cycle, you’ll need to buy the goods and services that keep you operational. This might be subscriptions to business software, raw materials for production or even accounting services.But if you’re going to get the maximum value from this procurement process, it’s important to be fully in control of what you’re buying and how you manage these costs.Managing your procurement in tough economic tim...

Driving your business with reporting

Do you wait for your Annual Accounts to arrive before you look at your numbers for the year?By the time your accounts have been finalised, the data is historical. Any changes you make, as a result of reading these, may not necessarily be helpful for your future.Would you drive your car forward by looking in your rear-view mirror? Talk about dangerous!If you want to take control of your business’s future, it’s essential that you set targets to achieve and regularly monitor your actual results...

B corp companies: business as a force for good

B Corp companies are a new type of business model that aims to make business a force for good. This means putting sustainability and a positive social impact at the heart of your mission.In a world where capitalism is increasingly being seen as the root cause of many of the world’s problems, the B Corp concept aims to revitalise the idea of what a business can do, and the good that can come from running an ethical, socially conscious and green enterprise.Does this sound like the kind of idea y...

The third cause of poor cashflow - Your stock turn

Carrying stock for too long means full shelves but an empty bank account. Similarly, if you’re a service provider and are taking a long time to bill for your services, then you’re carrying too much stock in the form of work in progress. Consider that work in progress a form of virtual stock.You can calculate your ‘stock turn’ by taking your cost of sales from your annual financial statements and dividing it by your average inventory (or work in process). Most clients need some help from ...

5 questions to ask when you are buying a business

Purchasing an existing company is a great way to expand your business empire. You can buy out a close competitor, or dip a toe into a new industry and expand your reach as a business group. But whatever the reason for the acquisition, you need to ensure you’re not buying a lemon!Doing your research is a crucial part of the purchase process. As is asking some probing and insightful questions to help you determine if this acquisition is a good (or bad) idea.Questions to ask before you make an of...

Why your accountant is the mentor you didn’t know you needed

A business mentor can provide guidance and support, so you make the right decisions and stay focused on the end goal as a business owner. They can also help you move forward in your career by providing advice and feedback on what steps to take to reach the pinnacle of success.But have you ever thought of your accountant as a mentor?Why your accountant is the ideal mentorHaving someone who understands your business journey is incredibly important. You might see an accountant as someone who files ...

Provisional tax: What you need to know

If you are an employee, your employer sorts out PAYE on your behalf. But when you’re self-employed, you need to pay your own income tax.For example, if you earned $100,000 from your business, the income tax on that income would be just under $24,000. This can be a lot to pay all at once. Provisional tax breaks your income tax lump sum into installments that are paid throughout the year, smoothing out your tax burden.How does provisional tax work?Provisional tax splits up your income tax into p...

Provisional Tax – how does it work?

If you had to pay tax of more than $5,000 in your last income tax return, you may have to pay provisional tax for the following year. Provisional tax is like paying progress payments on next year’s income tax.The amount you must pay relates to your expected profit for the year. In practical terms, the amount of provisional tax you’re expected to pay is based on the tax you were liable for in the previous year, often referred to as residual income tax (RIT).Even if you are not required to pay...

10 steps to Business Continuity Planning

‘Business continuity’ is the process of planning out how your company can continue trading – when disaster hits. In essence, it’s your Plan B for how to set up a means of trading, when you don’t have access to your usual offices, workspaces or equipment.10 key elements to include for your ongoing business continuity planDigital communication and cloud technology have given us the ability to access company information, applications and communication channels. For many businesses this wi...

Do you need to improve the cash flow position for your business?

Keeping on top of the financial management of your business can be hard work. It's possible to have a profitable business that is struggling to find the cash flow to pay expenses and fund growth. Likewise, you could have positive cash flow but are not turning a profit, particularly if you are scaling.Turning a profit is at the heart of running any successful company But without an even and predictable flow of cash into the company, you can't cover your overheads, you can't pay your employees and...

Keeping your business cash liquid – the difference between cashflow and profit

The foundational goal of any business is to make a profit. As a business owner, that’s one of your key financial aims – to make enough sales, at a big enough margin, to generate profit from your enterprise. But how does profit differ from cashflow? And why is cash king?How do profit and cashflow differ?To really understand the difference between generating profit and managing cashflow, we need to look at what both these terms mean. You might think that delving into the accounts is a job for ...

What's the difference between statutory and management accounts?

As a business owner, you know you need to produce accounts – that’s a given. But do you know the difference between statutory accounts and management accounts?Your statutory and management accounts have two very separate purposes, and producing both kinds is good practice for any business that wants a handle on its numbers.Let’s take a look at the key differences and why you need these specific kinds of accounting.1. What are statutory accounts?Statutory accounts are a legal requirement fo...

5 challenges for small business - and how to beat them!

Founding, building and growing your own small business is a hugely rewarding experience for many entrepreneurs. But the road ahead isn't always smooth.There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.So, what can you do to beat these challenges and make the journey as frictionless as possible?5 proactive ways to overcome your business challengesWe’d all love to know what lies around the co...

Bring your A game (not your O game)

Success in sport is all about playing your 'A game'. Being the best you can be through preparation and training leading up to the game, as well as through your actions during and after the game - showing modesty and humility in success and graciousness in defeat.If everyone on the team plays their 'A game' the results are impressive. So, how do we apply the 'A game' mindset from sport to the workplace?Three A’s that bring it:Appraise: work out who will make up your dream team. Consid...

Setting goals and measuring performance

Goals are what drive the long-term performance of your business.Agreeing on clear targets, and measuring your progress over time via key performance indicators (KPIs), helps you to understand exactly where the business is going.But how does this kind of performance management work in practice?Track your performance with KPIsTracking your goals via KPIs show you where the company is hitting the mark and (importantly) where you need to do better – putting real drive and motivation behind your ov...

A strong strategy is the heart of your successful business

Businesses that have clear objectives or goals, robust accountability and a shared sense of purpose should always outperform those that just show up and go through the motions.Strategy lies at the heart of most successful businesses. To achieve this you need to resource and execute with a clear purpose. Few businesses have a strategic plan or a robust planning process. Changing this situation should be a top priority! Here are two top tips for business owners.1. Process Creates the PlanGetting s...

The difference between directing and leading

There are 10 departments in every business, no matter how small. These are:Shareholder.Director.Leadership.Product / Service Development.Operations.Marketing.Sales.Finance.Admin / IT.HR.Many business owners control multiple departments. Imagine each department has a hat - worn by the single leader of each department. Many business owners wear multiple hats. The secret to the success of your organisation structure is to understand the key differences between the departments (and their responsibil...

The importance of business development

Business development is one of the most important areas of focus for any ambitious business.If you want your business to grow, that’s going to mean having a razor-sharp focus on new opportunities and strategies. That could mean exploring new markets, or nurturing new partnerships. It might mean diversifying to create new revenue streams, or coming up with new ideas to boost your profitability. But, ultimately, good business development comes down to having good ideas – ideas that broaden you...

Managing change in your business

Successfully implement change in your businessResearch by Kotter International found that more than 70% of change projects within a business fail. Why is this?The research findings show that employee engagement is the biggest factor. Whether it is a small change to one or two processes, or a company-wide change, it's common for staff to feel intimidated by it.So what can you do for successful implementation of change? Here are the principals from Kotter’s 8-Step Program:1. Get the team onboard...

Key numbers to focus on in your business now

As a business owner, it’s never been more important to have a good grasp on your finances.For many businesses, priorities have changed, customer behaviours have mutated and revenue streams have had to evolve and pivot in order to create a viable business model.To track, monitor and drive your financial performance in this new business world, it’s increasingly important to have a handle on your key financial reports and metrics.Getting to grips with your financial reportsWhereas in the past, ...