Could one late payment throw everything off?
If you’re running a service business, you’re not just selling time; you’re managing timing.
And that means one unexpected cashflow hiccup can undo months of momentum.
Growth doesn’t kill businesses.
Poor cash flow does.
Many agency owners focus on profit (which is essential). But profit is an accounting concept.
Cash is what keeps the lights on.
The uncomfortable truth is that most businesses don’t fail because they’re unprofitable; they fail because they run out of cash.
Here’s what we’ve seen in the economy over the past 18 months:
Payroll panics when a big client delays payment
IRD tax debt is building up quietly in the background
Directors pulling from personal savings or credit cards to cover shortfalls
Growth opportunities are missed because there’s no working capital
Emotional stress and sleepless nights… for a business that looks successful on paper
It may look like the business is profitable, growing, or there’s future work in the pipeline, but the reality is that you’re one curveball away from chaos.
If you want to build cashflow resilience? Here’s the game plan:
Target 3 months of operating costs in reserves
This includes wages, rent, subscriptions, and any other expenses that keep the engine running. Yes, this may be ambitious if you’re currently week to week, but you have to start somewhere.
Separate tax from operating cash
Open a dedicated tax savings account and set up automatic transfers into it. You must have the discipline to leave this cash sitting. Ultimately, it isn’t your money (it’s IRDs).
Forecast your cash, not just your profit.
Use Xero or a simple spreadsheet to map 12 weeks ahead. Tax payments for business owners can seem ruthless with monthly PAYE, bi-monthly GST payments, and just when you think you’re on top of it, a provisional tax instalment is due.
Watch debtor days
Set clear payment terms and follow up. If clients owe you money, it’s your money sitting in their bank account. Have a robust structure in place to manage this.
Prioritise cash over discounts
If needed, offer a 3% discount for upfront payment instead of 60-day terms.
A buffer gives you breathing room to make good decisions under pressure. Without it, you’ll find yourself making bad decisions with urgency.
This isn’t about hoarding cash. It’s about creating stability, confidence, and control.
Our most successful clients have strong balance sheets. This includes cash on hand, minimal debt, which allows for strategic growth opportunities, planning, and execution of their business plan. They have a target customer, sell a profitable core product at a good margin, and are not chasing shiny objects.
When you’ve got cash in the bank, you negotiate better, hire better, and sleep better.
Want help getting ahead of cashflow pressure before it hits?
We work with businesses to set up systems, buffers, and visibility, so you’re not flying blind.
Contact Us
Contact us today to discuss on 07 827 9130 or email us. Our office is in Cambridge, NZ, but distance is no problem. We have many international and national clients.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
