Industry Advice on Finance, Business & Tax for the New Zealand Market

Businesses with strong balance sheets are more likely to survive economic downturns and be ready to thrive when the going gets good again. So what does a strong balance sheet look like, and how can you take steps to strengthen yours?

Keeping the balance sheet “out of the red” is a top priority for any business owner. To do this and “stay in the black”, it’s important to be regularly scanning the horizon for any signs that you could be heading towards rough financial waters. There several indicators of potential financial trouble.

The 2016 Taxation Act introduces a provision allowing companies involved in intensive R&D to cash out tax losses tied to research expenditures. This aligns with the government’s Business Growth Agenda, aimed at promoting innovation as a key driver for economic progress.

How should I spend my net profit? This is a question most business owners grapple with when their business starts to run at a profit.

At a time when the tax landscape continues to change, it appears an old established rule dating back to the 90’s has become one of the focuses of the New Zealand Tax Department’s current compliance programme.

Deciding to change accountants can feel like a big step, but as your business grows it may become a very necessary one. So how do you know when it’s time to make the switch? Here are five questions to ask yourself before making this important decision.

It’s one thing to have a governance board; it’s another to have a good governance board! What processes can you put in place to ensure your board performs to a high standard? Take note of these five characteristics of good business governance to make sure you’re on the right track.

You know money is coming in, and it is definitely going out – but for some reason you don’t feel like the business is actually running a profit. Sound familiar? This could be because there are blockages in your working capital cycle (WCC), and it is important that you identify these before they become a large burden on your daily business operations.

Most businesses will need bank funding at one time or another – whether it is to purchase new plant and equipment, move to larger premises, or employ more staff - read on for tips that can help maximise your chance for success.

Taken together, the balance sheet and profit and loss statement represent a complete financial picture of a company and provide valuable “decision-relevant” information. Ratio analysis, in particular, is a useful management tool that can help improve your understanding of how well your business is performing financially and can be used to spot trends over time.

High performing boards often employ an independent advisor who can bring discipline, experience and objectivity. Having an external accountant or company lawyer on the board is common; but it is important to remember that these professionals should act in an advisory role with a ‘big picture’ or business focus.

For most SMEs, having a full time CFO in place is often not feasible – particularly one that can provide strategic thinking, progression and profitability. So here are the four main reasons that implementing a virtual financial controller or VCFO is a viable option to help your business grow.