Managing your cash flow

In every business, money comes in and goes out. Money can come in from a few sources: 

• earnings from products
• earnings from services 
• cash loans 
• business shares 
• business assets.  

Managing cash flow means checking that you have enough money coming in to cover your bills. Managing it well will help your business flourish. It can also streamline your day-to-day processes, so you don’t have as much admin to do. 

But it’s important to understand cash flow so you feel confident about managing it.  

When you understand your cash flow, you can make good financial decisions. It’s easier to work with banks or advisors. And it helps you see how healthy your business is, so you can keep on top of things. 

The video we’ve linked explains how to understand your cash flow. It shows you how to see what you’ve spent and where.  

Understanding your cash flow — business.govt.nz
 
Managing your cash flow well can help you build a strong business that’s ready to grow when you are.

Having an overview of your business income and expenses will help you predict future costs and create a cash buffer. Then if anything starts to wobble, you can stay on your feet. You might face a new competitor, price increases, a medical issue, or a natural disaster. You want to know you can bounce back if things change suddenly.  

Being prepared means you’ll be able to: 

• continue to provide for your whānau and community
• keep operating so your customers stay with you 
• minimise financial losses. 

Download our healthy business checklist — business.govt.nz

You need to know how to plan, right? Now that you can see how your cash flow works, you can look at predicting your future cash flow. 
 
“Predicting” sounds like a tall order, but it isn’t that hard if you use a cash flow forecast. A forecast can help you see where you are, where you’re heading, and how your business might grow. 

A cash flow forecast should show you: 

• the cash you have in the bank 
• cash you expect from sales, loans or assets 
• how your cash flow goes up and down over time
• your closing balance at the end of a set period. 

Have a go for yourself with our forecasting tool.  

Cash Flow Forecaster — business.govt.nz

Set your own timeframe 

A cash flow forecast predicts your business income and expenses for a set period in the future. You can choose a week, a month, a quarter, or a financial year.

Thinking of growing 

A forecast can show you opportunities to grow or invest. A forecast helps you look at past performance and make plans, so your business succeeds and grows. You can see how your business is doing compared with what you planned for. 

Growth can mean revenue, investment or people. But when you are looking to grow, take a good look at what you’re already doing. Often you don’t have to start from scratch - instead you can build on things you already have in place. It’s always good to find ways to save yourself work! 

Prep better  

You can use a cash flow forecast to get better at running your business. You might use it to help you identify the best time to send out invoices. It can also make it obvious when you need to prep for upcoming costs, like tax bills.  

Predict your income 

Predicting income isn’t easy. Think carefully about how much income you need for your plans and goals. Then think of three scenarios for your income:

• A scenario where things don’t go well. 
• A realistic scenario based on how things are right now. 
• A scenario where things go better than expected. 

When you plan like this, you’ll feel better prepared. And if you need a loan or investment, you can show your planning to banks or investors. 

You can get more help from business.govt.nz, an accountant, Inland Revenue (IRD) or a business adviser. 

Find out more about cash flow forecasts — business.govt.nz

Think about opportunities to grow your business — business.govt.nz