What is working capital and why is it important for your business?

Working capital is one of those business terms that sounds more complicated than it really is.

Put simply, working capital is the money available to keep your business running day to day.

You need it to pay wages, suppliers, rent, tax and other operating expenses. You may also need working capital to buy stock, take on a large new order, hire additional people or cover the gap between doing the work and getting paid for it.

And importantly, a business can be profitable and still have a working capital problem.

Understanding how working capital works can help you spot potential cash flow problems earlier – and work out whether you need to improve the way cash moves through the business or consider additional finance.

What is working capital?

In accounting terms, working capital is calculated as:

Current assets – current liabilities = working capital

Current assets are things your business expects to turn into cash within the short term, such as:

• cash in the bank

• accounts receivable (money customers owe you)

• stock or inventory.

Current liabilities are amounts your business needs to pay in the short term, such as:

• supplier accounts

• wages

• tax obligations

• loan repayments and other short-term debts.

If your current assets are greater than your current liabilities, you have positive working capital.

But the accounting calculation only tells part of the story.

For a business owner, the more practical question is often:

Do we have enough money available, at the right time, to meet our obligations and keep the business operating?

That is where working capital becomes particularly important.

Working capital, cash flow and profit aren't the same thing

It's easy to assume that a profitable business should have plenty of cash available. Unfortunately, it doesn't always work that way.

Imagine your business completes $100,000 worth of work this month. On paper, that revenue may contribute to a healthy profit.

But if your customers don't pay you for another 30, 60 or even 90 days, you still need to fund the costs of delivering that work in the meantime.

Your employees expect to be paid. Your suppliers may need paying. There may be GST, rent, insurance and other expenses falling due.

So while the business may be profitable, the cash hasn't arrived yet.

This is one of the reasons growing businesses can experience working capital pressure. More sales and more work can actually increase the amount of cash the business needs.

Why is working capital important?

Adequate working capital gives a business room to operate.

Without it, even ordinary expenses can become stressful. Owners may find themselves constantly juggling payments, delaying suppliers or waiting for a particular customer invoice to be paid before they can meet another obligation.

With sufficient working capital, a business is better placed to:

• meet its regular expenses when they fall due

• manage unexpected costs

• purchase stock and materials

• take advantage of new opportunities

• accept larger contracts or orders

• invest in growth

• manage seasonal fluctuations

• withstand customers paying later than expected.

Working capital isn't only about surviving a difficult period. It can also determine whether a business is able to grow.

Why do businesses run short of working capital?

There isn't one single cause.

Sometimes a working capital shortage is a sign that the business is struggling. But that isn't always the case.

In fact, some perfectly healthy businesses experience working capital pressure simply because of the way money moves through their business.

Customers take a long time to pay

This is particularly common in businesses that sell to other businesses.

You may have completed the work and issued the invoice, but if your customer pays on the 20th of the following month or operates on 60-day terms, there can be a considerable delay before the money reaches your bank account.

Meanwhile, you've already incurred the costs of providing the product or service.

You need to buy stock or materials upfront

Retailers, wholesalers, manufacturers, importers and many other businesses need to spend money before they can generate the corresponding revenue.

The larger the order or opportunity, the more working capital may be required.

Your business is growing quickly

Growth consumes cash.

A growing business may need more staff, more stock, more vehicles, more equipment or larger premises. Even when sales are increasing strongly, there can be a significant lag between paying those additional costs and receiving the resulting revenue.

This can create an interesting problem: the business needs more working capital because it is succeeding, not because it is failing.

Your business is seasonal

Some businesses have predictable periods when cash comes in faster than others.

If you need to purchase stock, hire seasonal staff or meet other costs before your busiest period begins, you may need additional working capital to bridge the gap.

A large payment falls due

GST, provisional tax, insurance premiums, equipment repairs or an unexpected supplier bill can put temporary pressure on cash reserves.

Even businesses with generally healthy cash flow can occasionally find that several significant payments fall due at the same time.

What are the signs of a working capital problem?

Working capital pressure often appears gradually.

You may notice that you are increasingly waiting for money to arrive before paying bills, stretching supplier payment terms, using personal funds to cover business expenses or regularly reaching the limit of an existing overdraft or credit facility.

Another warning sign is when a business appears busy and profitable, but there never seems to be enough cash in the bank.

If this happens occasionally because of a known timing issue, it may simply be a cash flow mismatch.

If it happens continually, however, it's worth looking more closely at what is driving the problem.

Finance can help with a timing gap. It generally won't solve an underlying business model that consistently spends more cash than it generates.

How can you improve working capital?

Borrowing isn't necessarily the first or only answer.

There may be opportunities within the business to release cash or reduce the amount of working capital required.

For example, you could look at:

• invoicing customers as soon as work is completed

• following up overdue accounts more quickly

• reviewing the payment terms you offer customers

• negotiating better terms with suppliers

• reducing excess or slow-moving stock

• asking for deposits or progress payments on larger jobs

• reviewing expenses and unnecessary cash outflows

• improving cash flow forecasting.

Sometimes relatively small changes can make a noticeable difference.

But there are also situations where external finance makes sense – particularly when the business has a temporary cash flow gap or needs additional working capital to support growth.

What finance can be used for working capital?

There isn't one particular type of "working capital finance" that suits every business.

The right option depends on why you need the money, how much you need, how long you need it for and how your business generates revenue.

Business loans

A business loan can provide a lump sum that can be used for working capital, stock purchases, expansion or other business purposes.

Loans may be secured or unsecured, and repayment terms, lending criteria and pricing vary considerably between lenders.

Invoice finance

For businesses that sell to other businesses on credit terms, invoice finance can be particularly useful.

Rather than waiting for customers to pay their invoices, the business can access some of that money earlier.

This can be useful where the underlying working capital problem isn't a lack of sales – it's simply that customers pay later than the business needs the cash.

line of credit facilities

A line of credit facility can provide flexibility where working capital requirements move up and down.

Rather than borrowing a fixed amount for a fixed purpose, the business can generally draw funds when required and repay them as cash becomes available, subject to the terms of the facility.

Secured lending

Property or other business assets may sometimes be used to support additional borrowing.

Depending on the circumstances, secured lending can provide access to larger amounts or different lending terms than an unsecured facility. Similarly, a second mortgage could give you access to a larger loan than a standard business loan, depending on the LVR in your property or the number of properties you own.

The important point is that the best finance option depends on the reason for the working capital requirement.

A business waiting 60 days for customers to pay invoices has a different funding problem from a business needing $200,000 to purchase stock for a major new contract.

They shouldn't automatically be given the same finance solution.

How much working capital does your business need?

There isn't a standard amount that every business should have.

A professional services business with very little stock and customers who pay promptly may require relatively little working capital.

An importer that needs to purchase several months' stock before selling it may require considerably more.

The amount you need can also change as your business grows.

A useful starting point is a cash flow forecast showing when money is expected to come in and when major expenses need to be paid.

Rather than simply asking "How much can I borrow?", it can be more useful to ask:

How large is the funding gap, how long will it exist, and what is causing it?

Those answers can help determine both the amount of finance required and the most appropriate type of facility.

Choosing the right working capital finance

There are many lenders offering business finance in New Zealand, and their lending criteria, products and appetite for different types of businesses vary.

The lender or product that works well for one business may not be the best fit for another.

That's one of the reasons businesses use a finance broker.

At NZ Business Finance, we look at what you're trying to achieve, why the business needs funding and how the finance will be repaid before considering which funding options and lenders may be suitable.

Sometimes that might be a traditional business loan. In other circumstances it could be invoice finance, a revolving facility, secured lending or another form of business finance.

The goal isn't simply to find finance. It's to find finance that fits the way your business operates.

If your business needs additional working capital – whether to manage a short-term cash flow gap, purchase stock, take on a new contract or support growth – talk to NZ Business Finance about the funding options available.

Frequently asked questions about working capital

• What is working capital in simple terms?

  Description text goes hereWorking capital is the money a business has available to meet its day-to-day operating costs and short-term financial obligations. It is calculated by subtracting current liabilities from current assets. In practical terms, having enough working capital means having enough money available at the right time to pay suppliers, wages, tax and other expenses while keeping the business operating.

• What is the difference between working capital and cash flow?

  Working capital is a measure of a business's short-term financial position, while cash flow describes the money moving into and out of the business over a period of time. The two are closely related. A business can have valuable assets and money owed by customers but still experience cash flow pressure if that money isn't available when bills need to be paid.

• Can a profitable business have working capital problems?

  Yes. A profitable business can still run short of working capital, particularly if customers take a long time to pay or the business needs to pay for stock, materials, wages or other costs before receiving the corresponding revenue. Rapidly growing businesses can also experience working capital pressure because they need to fund increased activity before the additional cash comes in.

• Can I get a business loan for working capital?

  Yes. Business loans can be used to provide working capital, but a standard business loan isn't always the most appropriate option. Depending on why you need the money and how your business operates, alternatives such as invoice finance, revolving credit or secured business finance may be more suitable.

• How do I know how much working capital my business needs?

  The amount varies considerably between businesses. A good starting point is a cash flow forecast showing when you expect to receive money and when your major expenses fall due. This can help identify the size and duration of any funding gap. If external finance is required, understanding what is causing the gap can also help determine which type of finance is most appropriate.

Common mistakes business owners make when applying for finance (and how to avoid them)

Applying for business loans can feel overwhelming, especially if you’re not familiar with the finer points of business borrowing or what lenders want to see. Many business owners unintentionally make mistakes that delay their applications, reduce their borrowing options, or result in higher costs. The good news? These mistakes are completely avoidable with the right preparation.

As a business loan broker, I see patterns every day across hundreds of applications. Below are the most common pitfalls in business lending—and, importantly, how you can avoid them to improve your chances of approval and secure better loan terms.

1. Not having up-to-date financial information

Reliable financial information is essential when applying for business loans. Yet many borrowers submit outdated or incomplete details.

Why this matters

Lenders rely on clear financial statements to determine risk and assess whether you can comfortably service the loan. Outdated books slow the process down and can result in a decline. Messy financials could indicate a messy business.

How to avoid this

• Keep bookkeeping reconciled monthly

• Prepare P&L, balance sheet, aged receivables/payables, and tax returns

• Provide year-to-date figures for transparency

Accurate, organised financials show lenders you run a disciplined and reliable business.

2. Applying for the wrong type of loan

A common business borrowing mistake is choosing a loan that doesn’t match your actual needs.

Examples of mismatches

• Using a short-term loan for long-term assets

• Applying for unsecured lending when asset finance is cheaper

• Choosing a line of credit when invoice finance would be more suitable

How to avoid this

Ask yourself:

• What exactly do I need the funds for?

• How long will I benefit from this investment?

• What repayment structure suits my cashflow?

The right business loan should match both purpose and repayment capability.

3. Not knowing their own numbers

One of the first things I’ll ask a client is what their monthly revenue is. So many times, the business owner does not know the answer. Strong business lending decisions require confidence and clarity. Many business owners simply don’t know their cashflow cycle, margins, or average monthly revenue.

Why this matters

Lenders trust borrowers who confidently understand their financial position. If you know your numbers, you present as organised and low-risk.

How to avoid this

• Review financial reports monthly

• Understand your expenses, revenue trends, and cashflow patterns

• Prepare for lender questions about performance and future projections

A broker can help translate your numbers into lender-friendly insights.

4. Damaging their borrowing power without realising it

Sometimes business owners unintentionally harm their borrowing profile.

Red flags in business lending

• Late tax or supplier payments

• Low or negative account balances

• Unstable cashflow

• Personal and business accounts mixed together

• Defaults to other finance companies

How to avoid this

• Pay bills on time

• Keep personal and business finances separate

• Maintain positive balances

• Check your business credit score regularly

Small habits can significantly improve your future business loan options.

5. Submitting multiple loan applications at once

Many people believe “more applications = better chance”, but in business lending this does the opposite.

Why this matters

Each application can leave a footprint on your credit file. Multiple inquiries make lenders nervous and can lead to declines.

How to avoid this

• Work with a broker to assess eligibility before applying

• Submit one strong, strategic application

• Only apply elsewhere if your broker recommends it

Brokers compare lenders without affecting your credit score.

6. Not being clear about how the funds will be used

Vagueness is a red flag in business lending. Lenders want specific, tangible reasons for business borrowing. Under the anti-money laundering laws, a lender needs to enquire about (and prove through records that they have enquired about) the nature and purpose of the loan. If you can’t explain your business very well, or are vague about the reason for the loan, this could hinder your application.

How to avoid this

Be clear about:

• What you’re funding

• How it benefits the business

• How it supports growth or stabilises operations

The more specific you are, the stronger the application.

7. Ignoring cashflow and repayment capacity

A common mistake in business borrowing is focusing on approval rather than affordability. I’ve seen many loan applications where it’s easy to see there is no serviceability.

Why this matters

Lenders want assurance that repayments won’t create strain—especially during quieter periods.

How to avoid this

• Understand repayment calculators

• Review monthly averages, not your peak month

• Factor in seasonal trends

A good broker will ask lenders to provide you with an indication of what your repayments are going to be. They will be able to describe different loan products of different lenders so you can select the borrowing scenario that considers the unique cashflow cycles of  your business.

8. Waiting too long to ask for help

The most successful loan applications are planned—not rushed. Many business owners only approach a broker when they’re already stressed or desperate. The problem is that by the time you’ve had a bunch of defaults to other finance companies, the number lenders that will consider your application drops significantly.

Why early support is best

A broker can help you:

• Improve or tidy up financials

• Select the right loan type

• Prepare documents properly

• Approach the right lender the first time

Early preparation = better business loan outcomes.

9. Ruling out certain loan types without fully considering them

One of the most overlooked mistakes in business borrowing is dismissing certain loan products without understanding how they work or how they might support your cashflow. Many business owners assume some lending options are too risky, too expensive, or “not for them”—when in reality, these products can sometimes be the best solution for their specific situation.

Invoice finance is the perfect example

A lot of businesses immediately rule out invoice finance because they think:

• it’s only for struggling businesses

• it’s complicated

• it’s expensive

• it interferes with customer relationships

But in many cases, invoice finance is one of the smartest forms of business lending, especially for businesses with long payment terms, seasonal cashflow gaps, or rapid growth. It’s also great for new businesses that don’t qualify for other types of loans.

Why this matters

By automatically excluding options like invoice finance, lines of credit, or asset-backed lending, business owners may end up with:

• the wrong type of loan

• higher costs

• tighter repayments

• unnecessary strain on working capital

How to avoid this mistake

• Keep an open mind during the loan discovery process

• Compare options based on cost, suitability, and cashflow impact—not assumptions

• Consider short-term solutions that bridge immediate cashflow gaps

• Ask your broker to explain how each business loan structure works and how it aligns with your needs

A good broker will help you evaluate all business lending options and understand why one product may fit better than another—often revealing solutions you didn’t know existed. Your broker should never tell you which type of borrowing you should take out – that is your decision.

Final thoughts: smart borrowing creates better business outcomes

Avoiding these common mistakes can dramatically improve your experience with business lending. With the right strategy, preparation, and guidance, you can secure business loans that support growth, smooth cashflow, and reduce financial stress.

A business loan broker helps you navigate this complex landscape—saving you time, money, and unnecessary frustration. If you want to understand your options or prepare for better borrowing, getting help early is the smartest move you can make.

ready to get started?

We’re standing by to help you with your loan application, and to guide you through the process. To get started, contact us today!

Registered mortgage vs caveat: What’s the difference for NZ business loans?

This is not a substitute for legal advice. If you are thinking about a secured loan, we always recommend getting independent advice.

If you’ve ever tried to get a secured business loan in New Zealand, you’ll know it’s not always easy to get money through the banks, no matter how loyal you are and how many accounts you have with them. Banks usually want detailed financial statements, plenty of history, and lots of time to process an application. They’re very risk-averse, which is why they are the cheapest source of business loans. But that risk averseness can be a real barrier when you need cash quickly to grab a business opportunity or manage cashflow. And if you’ve got IRD arrears, your chances of securing funding, even with plenty of equity in your home, are extremely low (see my other blog post about that here.

If you’re not afraid of putting your property up as security, this is where non-bank and second-tier finance companies come in. They’re generally faster and more flexible and there are plenty out there that are happy to lend against your house. And that’s where it’s important to understand the difference between a registered mortgage and a caveat. Both are used to secure business lending, but they work quite differently and have very different implications if something goes wrong.

what is a secured business loan?

A secured business loan is a type of finance where the borrower (you) offers an asset — usually property — as collateral. If the business can’t repay the loan, the lender can use that asset to recover the money owed.

Secured loans often come with lower interest rates and larger loan amounts, because they reduce the lender’s risk. The trade-off is that the your property is on the line if you default.

what is a registered mortgage?

A registered mortgage is the most formal type of property security. It’s registered on the property title with Land Information New Zealand (LINZ), showing that the lender has a legal interest in the property.

From the lender’s point of view, this provides strong protection. You can’t sell, refinance, or transfer ownership of the property without their consent. And if the loan isn’t repaid, the lender has the right to take possession and sell the property to recover the debt.

Because of these strong rights, registered mortgages are typically used for larger or longer-term secured business loans. They require more documentation and due diligence, but they also provide lenders with greater confidence — which can make it easier to borrow bigger amounts.

what is a caveat?

A caveat is a different kind of security notice. Instead of giving the lender full rights to your property, a caveat acts as a warning on the title that someone else (the caveator) has an interest in your property.

When a caveat is lodged, it effectively blocks the property owner from selling or further mortgaging the property until the caveat is lifted or resolved. This makes it a popular option for short-term business loans where speed is crucial and setting up a full mortgage would take too long.

However, a caveat doesn’t allow the lender to automatically sell the property if you default. To get their money back, they would need to apply to the court — a process that’s slower and less certain than enforcing a mortgage. If things are looking dicey, they may contact you about registering a mortgage before things get really bad, which is an indicator to you that you need to act quickly to get your loan repayments back on track, or refinance your loan.

registered mortgage v caveat, the main differences

Feature	Registered Mortgage	Caveat
Legal authority	Gives lender direct rights to sell property if borrower defaults	Acts as a notice; prevents sale or transfer until resolved
Recovery power	Lender can take possession and sell property	Lender must apply to court to recover debt
Typical use	Larger, long-term secured business loans	Short-term, fast-approval loans
Setup process	More documentation and financial checks	Simpler and quicker to register
Impact on borrower	Strong restrictions if in default	Limits property dealings but doesn’t give sale rights

WHAT HAPPENS IF YOU DEFAULT ON A SECURED BUSINESS LOAN?

If your loan is secured by a registered mortgage, the lender can move fairly quickly to enforce it. They’ll issue a demand for repayment, and if that’s not met, they can proceed with a mortgagee sale. The property is sold, the lender gets their money back, and any surplus funds go to you.

If the loan is secured by a caveat, it’s a different story. The lender can stop you from selling or refinancing the property, but they can’t simply sell it themselves. They’d need to apply to the court for a charging order or other enforcement method. This makes caveats less powerful but also less intrusive than mortgages.

WHICH OPTION IS RIGHT FOR YOUR BUSINESS?

We can’t tell you what is right for your business, and our advice if you are thinking about secured borrowing is to get advice first. But if you’re exploring property-backed business finance, the right type of security depends on your situation, and may ultimately be dictated to you by your lender:

• Registered mortgages are usually for long-term borrowing or larger loan amounts where the lender needs stronger protection.

• Caveats work well for smaller, short-term, or bridging loans where speed and flexibility are the priority.

FINAL THOUGHTS

Understanding the difference between a registered mortgage and a caveat is crucial before you agree to any secured business loan in New Zealand. Both can be effective tools for accessing funding, but they carry very different rights and obligations for you and your lender.

Before signing anything, always get independent legal and financial advice. Knowing exactly what you’re agreeing to will protect both your property and your business down the line.

And if you need a secured business loan and the bank has said no, we have a range of lenders that will be happy to look at your application. Contact us to find out more.

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Open banking - scary or safe?

You might have heard the term ‘open banking’ before, but a bit murky on what it is.

You might be using it already

Believe it or not, you might have used open banking without even knowing it, for example if you use POLi for paying for something online. Maybe you use it in your business, with the bank feeds into Xero or other accounting software.

Many lenders are using open banking to speed up loan processing. When you get sent a link to click that then asks for your internet banking login and password, you’re entering the world of open banking.

Scary or safe?

For some, entering your online banking credentials to a site that’s not your bank is quite nerve-wracking. Questions come up about what data the lender will see, and where the data is going, and whether the lender you are applying for business finance with, will have ongoing access to your bank accounts.

In this blog post, we explain what open banking is, how it benefits you and your business loan application, and answer some frequently asked questions.

What is open banking?

Open banking is technology infrastructure. The technology is provided by the banks to approved companies, to allow transfer of your transaction data at your request, via an API (application programming interface). An API is basically the code that lets two unrelated systems talk to each other.

The technology is standardised, safe and secure. Any organisation that wants to use these API’s can use them (with the bank’s permission) and know that what they are using is going to be safe for customers.

The key thing with open banking is that you, the customer, give express permission for your banking data to be shared with a third party.

Why use open banking?

Our lives are becoming increasingly digitised. Banks and other institutions hold a lot of information that we’ve given through our actions (eg deposits, payments, transfers). This information is of interest to lenders.

Open banking allows you to say who can access that data. Obviously, banks can’t provide your banking data activity to a finance company without your express consent. By using an open banking portal with the banks’ API, you give this consent with a few keystrokes and clicks of your mouse.

Summary of benefits

• You don’t need to download and send bank statements – quicker to get your loan application underway.

• Increased security –

  • You’re not saving bank statements onto your PC or device.

  • You don’t need to use email to send bank statements.

• Faster processing of your loan application, as the transactions are analysed automatically.

• You provide transaction data right up to today’s date, whereas your most recent bank statement might be a month old.

• Your lender can be certain that you are providing accurate information.

Your questions, answered

Here are some frequently asked questions about connecting your bank statements for your finance company.

Aren’t I breaching my agreement with my bank by sharing my login and password?

No, that’s not the case. If an open banking platform gives you the opportunity to log in using your online banking details, it means that your bank has provided the necessary technology to share your banking transactions. This is the key point: the technology is provided by your bank.

Am I giving the lender access to my bank accounts?

Also no. What happens is that the bank provides a one-time download of transactions to the lender. In some cases, the software will categorise and analyse the transactions and give the lender a summary.

My online banking has my personal accounts as well as my business accounts – do lenders look at my personal banking information?

Generally, lenders are not interested in your personal banking information, unless they need to see proof of personal income. The upside of providing business and personal banking data is that payments to your bank accounts from your business accounts can be cross-checked.

My business banks with more than one bank – do I need another link?

Usually, you can reuse the link that your lender has sent you to connect your other banks. The lender will know who the data is from and which bank it has come from, as that information is part of the data download.

Many of the lenders that we work with will have open banking facilities. Sometimes we will send out the link, and other times it may be automatically sent out from a portal in which we’ve loaded your information to start your loan application.

We think that open banking is a good thing, and we see the benefit with quick turnaround of loan applications with our partner lenders.

Scary or safe? We’re confident it’s safe.

Thinking about finance? Check out what kinds of loans we can help you with here.

Ready to apply? Drop us a line and we’ll be in touch real quick.

7 habits to make you irresistible to business lenders

Running a business is tough, and the small business owner wears many hats: sales, finance, marketing, HR, operations, client service … it’s exhausting! Sales, operations and client/customer service usually take precedence, because it’s all about making money, right?  But taking a little bit of time every day – it could be as little as 15 minutes – to put your Finance Manager hat on, can make a big difference when it comes to applying for all kinds of business finance. The idea is to be an irresistible prospect for lenders. When your financial house is in order, business lenders see a lower risk and are more likely to offer you those coveted lower interest rates. Plus, adopting good habits can save you and your business time and money in the long run. Here are seven daily or weekly finance-related habits that will not only make you more attractive to banks, lenders and financiers but also keep your business thriving.

1. Sweep GST on invoice payments received to a savings account

Every time you receive a payment, make it a habit to sweep the GST portion into a separate account. This simple step ensures that you're always prepared for GST time, avoiding any last-minute scrambles. Plus, it keeps your main account balance accurate, giving you a clearer picture of your cash flow.

2. Reconcile your bank statements regularly

Don't let bank reconciliations pile up. Make it a daily task, or at the very least, do it once a week. Regular reconciliations help you spot discrepancies early, meaning they are quicker and easier to fix because you don’t need to think back too far to figure out what’s gone wrong. It also ensures that your balance sheet is up to date. Lenders love seeing a business that can whip up accurate financial statements in the blink of an eye.

3. Adjust direct debits to match customer payments

Timing is everything, especially when it comes to cash flow. Adjust your direct debits so they coincide with incoming customer payments. This way, you'll always have the funds available to cover your expenses, avoiding overdraft fees and showing lenders that you manage your cash flow smartly.

4. Pay GST and PAYE when you submit your returns

Don't procrastinate on your taxes. Get into the habit of paying your taxes at the same time you file your tax returns – Inland Revenue gives you the option to do this when you file your GST and PAYE returns. If you’ve followed point 1 above, then this should be a piece of cake. This practice not only keeps you compliant but also avoids the accumulation of debt that can make your business look risky to lenders. And if you do get behind on your taxes, contact IRD to make a payment arrangement, they’re always happy to help (they’re not so bad, after all!). Lenders don’t mind so much when you are behind on your tax payments if you have a payment arrangement in place. They will treat it like any other business borrowing when assessing your loan application.

5. Maintain an emergency fund

Set aside a portion of your earnings into an emergency fund. This fund acts as a financial safety net, helping you weather unexpected expenses or downturns. This shows lenders that you're prepared for the unexpected and capable of managing risks.

6. Monitor your accounts receivable

Keep a close eye on your debtors. Nobody likes to do this, but you need to follow up on overdue invoices promptly. If you can withstand the cost, you could offer incentives for early payments. Effective management of your receivables improves cash flow and demonstrates to lenders that you’re proactive in managing your income streams. (Or if you have an invoice finance facility, your lender will do this for you – cash and accounts receivable help - bonus!).

7. Automate where possible

Leverage technology to automate routine financial tasks. Whether it's invoicing, payroll, or expense tracking, automation saves time and reduces the risk of human error.

Adopting these habits will not only make your business more attractive to lenders but also streamline your financial management, saving you time and money. Don’t we all want to spend less on accounting fees? By showing that you're proactive and responsible with your finances, you'll be in a stronger position to secure favourable business loan terms. Remember, the key to a thriving business is not just in making money but in managing it wisely. So, get started on these habits today, and watch your business flourish!

Then when your need to buy a vehicle or equipment, or business is growing and you need to finance that growth through a secured or unsecured loan, or invoice finance, we can help you get the finance you need … quickly and efficiently if you’ve implemented some of our suggestions!