Depending on your industry, the holiday period can be a slow time of year for business. Despite a dip in cashflow you still need to meet your expenses.
Ensure your bases are covered before you clock off for the year.
1. Plan ahead
Update (or create) a budget to figure out how just much you are going to need to cover your expenses. This is especially important if it’s going to be several weeks before you are generating income again. Maybe businesses close down for weeks over the holiday period. If this is your business, planning ahead is essential.
A budget or a cashflow forecast will help you identify any issues before they become problems.
2. Increase your cashflow where possible
Look for opportunities to increase your cashflow in advance of the holiday break. Ways to do this include:
- Prioritising jobs you can complete quickly so you can invoice clients straightaway.
- Incentivising early payment for completed work by offering a discount.
- Chasing all outstanding invoices.
- Seeing if you can re-negotiate payment terms with suppliers.
- Reducing unnecessary spending.
3. Don’t forget taxes
IRD expects GST and Provisional Tax payments to be made on 15 January 2020. Interest and late payment penalties can apply if you don’t.
If paying both GST and Provisional Tax is going to hurt the bank account, prioritise paying the GST. You can utilise the services of an IRD-approved tax pooling provider such as Tax Management NZ to pay the provisional tax later. They reduce IRD interest by up to 30% and eliminate late payment penalties.
As always, we’re happy to work with you so you have nothing to worry about while you enjoy your summer break. Feel free to give us a call on (06) 878 8824.