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1Tahi
Know your numbers
As an accountant, I had a tendency to assess the information from a retrospective profit perspective. It wasn't until we went farming and started Greaves' Goods that we really focused on the operational components like cash flow and productivity.
All of this highlighted the disparity between profit and cash, which is something we've had to emphasise with our kids, that when you sell a carton of eggs it’s not all profit.
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2Rua
Be proactive with your banking partner
I learned that going to the bank manager on the 19th of the month for a temporary overdraft didn’t provide them with much confidence that I understood my business very well. Building financial literacy is crucial.
To manage the peaks and troughs of cash flow, it’s good to proactively speak to your bank manager so you can plan for possible outcomes and bridge any potential gaps. By understanding your unique cash flow cycle, you can identify opportunities to narrow this gap. This could be as simple as changing the timing of your invoicing.
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3Toru
Run separate bank accounts
There’s often a blurred line between personal and business expenditure when you’re starting out in business. Does dinner on the credit card really count as a business expense?
Having a separate business account helps build credibility with your bank when it comes to validating actual income and expenditure. It not only builds brand awareness when you’re interacting with customers, it also takes away the confusion for your accountant at the end of the year.
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4Whā
Embrace integrated accounting platforms
We’ve gone from simply using basic software primarily to prepare financials to utilising cloud technology and intelligent software that supports our business in a really seamless way. It is essential for us to manage and track cash flow, address the tax implications of GST, PAYE, stock reconciliation, and also manage our invoices.
When considering accounting software, it's crucial to understand its ability to integrate with other systems. We now have a much greater appreciation of the efficiency of this functionality, removing the need to re-enter data in two systems and as a result, reducing the opportunity of errors and minimising time spent in front of the screen.
Integrated accounting platforms such as Xero have certainly made life easier when it comes to preparing financial data. Xero has provided us with up-to-date information to make informed decisions, and enables us to store invoices in the cloud as opposed to a pile of boxes in the garage.
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5Rima
Ask for help
One thing I’ve come to appreciate in business is the need to ask others for feedback, advice or guidance. Yes, this will make you appear slightly vulnerable but that’s okay. Everyone has to learn somehow. Look for business owners who have similar experiences, or even those who have travelled completely different journeys – you’ll gain a greater perspective your business.
You can also ask your accountant or bank manager for any insights they might have observed in working with clients. This can assist in building relationships with people in your broader ecosystem, such as key suppliers.
Talk to us
If you want to talk through how your business can stay in the black, get in touch with our business banking team.
Find a business banking specialist
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This page provides general information and isn't intended as regulated financial advice. To review your specific situation and financial requirements please talk to one of our Business Banking specialists or your Financial Adviser.