Tips for managing debt in your small business
September 15, 2020
Running a small business requires taking some risks. Debt is one of those risks, but it is also a positive tool for small business that is usually necessary in order to fund your growth. However, when circumstances change and your debt levels grow, it can keep you up at night. It is important to act early and put a plan in place to manage it.
Here are some useful tips from Xero to help you take control of your debts.
Understand your situation and take action
If you’re facing increasing debt, take action instead of hoping for the best. Stay sharp and aware of your situation. Use good quality accounting software (like Xero!) to keep a close eye on your outstanding debt and monthly payments. This information should be at your fingertips at all times. After that, your priorities will depend on the type of business you run and how flexible your suppliers are willing to be. The following payment priorities are suggestions, but the actual order is for you to decide:
- Payroll
If you don’t pay your employees' wages on time you may be penalised for this. You may be able to renegotiate contracts with some staff, but that's likely to affect their morale. - Suppliers and business partners
Avoid losing valuable goodwill with your most loyal suppliers and business partners. - Aged payables (60 days or more)
If you don’t pay, your credit score will be impacted, which will affect your ability to borrow money in the future. - Bills
Outgoing costs such as rent and utility bills need to be paid to keep the lights on! And again, not paying these could affect your credit rating. - Secured debts
If you run your business as a sole proprietor or partnership, you might be held personally liable for debts, and creditors could try to take your assets. This is one good reason to form a corporation or limited liability company. - Insurance
Especially professional indemnity and public liability cover. - Credit cards
Avoid penalties or interest charges as these can pile up quickly.
Renegotiate bank loan terms
You may be able to renegotiate your bank loan so it's spread over a longer term, to reduce the interest payments and also the monthly repayment cost. The bank may want to charge a higher rate due to the perceived increased risk of default, so you won't save as much money as you might like. Even so, this can give you some breathing space.
Discuss more favorable payment terms
Talk to all your creditors. Explain the situation and make it clear you have a comprehensive plan for resolving it. Stay positive – tell them you want to pay in full but need to renegotiate terms for that to happen. They should understand that it's in their interest to accommodate your request. After all, if your business fails they'll get nothing back. Be proactive here. If you approach your creditors before they start chasing you for missed payments, they're more likely to take you seriously and agree to your terms.
Increase your revenue
Easier said than done, of course, but there are ways you can boost short-term revenue. By taking action, you could reduce your debt payments enough to get you back on track.
- Offer your customers mark-downs or reduced prices
Discounts for fast payment can help improve your cash flow. - Get to know your customers better
Get their feedback on your business so you can tailor what you sell to meet their needs better – and maybe charge a mark-up for doing so. - Meet with your accountant, financial planner or banker
Share your business plans and see if they can introduce you to some of their other clients, perhaps in exchange for a small finder’s fee.
Reduce business costs: 5 tips to consider
Think about where you can cut costs. Use accounting software to list your largest outgoings and see where you can make reductions. For example:
- Reduce the amount of space you rent or lease, especially if you're not using it all.
- Consider making some employees redundant, but be careful about hiring too many short-term consultants instead – as that can work out to be more expensive.
- Can you combine your business loans into one payment that will reduce monthly costs and not adversely affect your credit score? Talk to debt consolidation companies about this, but read the small print carefully.
- Consider refinancing, if your credit record will allow it.
- Negotiate with suppliers. Don’t be shy about asking for discounts, especially if you buy in bulk or place regular large orders and have a good payment history.
Be intelligent about where you cut costs
You might feel like you need to cut costs to the bone when debt looms over you, but sometimes it can be counter-productive. Don't assume cutting costs will automatically save you money. It's where and how you cut costs that matters.
For example, if you slash your marketing budget you might save a lot of money in the short term, but you will lose potential new clients. Cut your shop floor space and you'll save rent, but reduce the range of stock you can display to customers. Make some of your staff redundant, and you won't be able to handle any larger contracts that come your way.
Cut when you need to, but do it sensibly. Before you start, use accounting software to forecast the financial impacts of different cost-cutting options. Trim the fat out of your business, not the muscle.
Raise funds to pay your debts
This will be difficult. A new business that's free from debt is a better investment proposition than one that's having financial problems. Still, you have choices:
- Borrow from friends or family
This can be awkward and could strain your relationships, but you may get favorable rates. - Liquidate assets
Creditors are likely to accept this because they'll want to be paid at least something, and this way they'll get a better deal than if you went bankrupt. Their only other option might be litigation, and that's timely and expensive. - Look for new investors
Be aware that any new money will be expensive for you. Investors who might have wanted 5% of your new business in exchange for their money might want 30% now you're in difficulties.
Be realistic about your options
More than a third of business owners are less than comfortable about their levels of debt, so you're not alone. Do everything you can to keep your business running, and talk to local business advisors to see what help they can offer.
With luck and perseverance, you'll be able to turn your business around. But if things don't improve, you may have to consider closing your business and declaring bankruptcy. That would hurt, of course, but it doesn't have to be the end of your dreams.
Many entrepreneurs fail in business at least once before finding a successful strategy. And as long as you learn from the experience, you may be able to bounce back stronger next time.
All Accounted For can help you assess the situation and create a repayment plan. This will include your business priorities and your obligations such as payroll, suppliers, tax, insurance and other bills.
So, if you're in debt, come and talk to us about your options.
Original article link: https://www.xero.com/nz/resources/small-business-guides/business-management/manage-debt/
Deciding to close your business is a significant step - both financially and personally. Beyond the emotional aspects, there are important legal, financial, and tax responsibilities that must be carefully managed. When done properly, closing a business helps you meet your obligations, avoid penalties, and maintain a clear financial record. As your accountants and business advisors, we’re often the ones helping to manage this process and communicate with relevant parties on your behalf. Below is a step-by-step outline of what’s involved, and who is typically responsible at each stage: 1. Make the Decision with Confidence: Responsibility: Business owner(s) / directors Key Actions: Review your financial position, assess timing, and seek professional advice. It’s important to work closely with your trusted business advisor (that’s us!) so we can help you understand the financial, legal, and tax implications. Together, we’ll explore your options, forecast potential outcomes, and ensure your decision is well-informed and considered. 2. Notify Stakeholders Early: Responsibility: Business owner(s) / management Key Actions: Notify employees, banks, suppliers, landlords, and clients as early as possible. Ensuring staff entitlements are handled correctly and contracts are managed fairly will help prevent complications later. 3. Settle Debts and Manage Liabilities: Responsibility: Business owner(s) and accountant Key Actions: Make sure you pay creditors, chase up any outstanding invoices, and think about any personal guarantees you’ve given. Clearing these up protects both your business and your personal reputation. 4. Dispose of Assets: Responsibility: Business owner(s) with accountant guidance Key Actions: Selling, transferring, or writing off assets (such as inventory, equipment, or property) can have tax consequences. We’ll advise you on the best approach to minimise tax exposure and maximise value. 5. Prepare Final Financial Statements: Responsibility: Accountant / finance team Key Actions: We’ll prepare your final set of accounts to reconcile all transactions, calculate any taxes owing, and ensure everything is accurate and complete. 6. Lodge Final Tax Returns: Responsibility: Accountant / tax agent Key Actions: This includes submitting final income tax, GST, PAYE, and any other required filings. With our support, you can be confident all obligations are met and penalties avoided. 7. Deregister the Business: Responsibility: Business owner(s) with accountant support Key Actions : We’ll guide you through cancelling business registrations, GST, licences, and permits. This is the official step to legally close the business. 8. Retain Records Safely: Responsibility: Business owner(s) Key Actions: Keep financial records for the legally required period (usually seven years) in case of future tax or legal queries. Common Pitfalls to Avoid: Rushing the process without professional guidance Overlooking asset disposal or tax implications Failing to notify all stakeholders Missing lodgment or deregistration requirements We're Here to Help: Closing a business can feel overwhelming, but with careful planning and professional support, it can be managed smoothly and confidently. Our team is here to guide you through every step, ensuring your closure is compliant, clear, and well-managed.
Great news! Xero’s fixed asset section just got an upgrade! You’ll now enjoy a cleaner, more accessible, and responsive interface - making it easier than ever to manage your assets. All the familiar features are still there, and you can now attach files directly to your fixed asset records for improved documentation and tracking. How to Attach a File: Navigate to Fixed Assets: In the Xero accounting menu, select "Fixed assets". Open Asset Details: Click on the asset number to view the asset details. Attach Files: Click the "Attach files" button located on the right hand side of the page. Upload or Drag and Drop: You can either click "Upload files" to select a file from your device or simply drag and drop a file into the upload area. Attachments could be a copy of the bill or a photo of the asset. Save Changes: Click "Save as draft" or "Register" to save the changes. Extra tip: You can also attach files to assets that have already been registered - making it even easier to keep your records accurate and up to date.
View our October 2025 General Ledger: - Closing a Business: A Step-by-Step Guide for Business Owners - Important Notices - Halfway Through the Tax Year - How Is Your Business Tracking? - Xero Tip of the Month: Attach File Now Available in New Fixed Assets - Welcome to the Team: AJ & Zack - Tax Question of the Month: Are Repair Costs for an Inherited Run-Down Rental Property Tax Deductible? - IRD Upcoming Tax Payment Dates https://public2.bomamarketing.com/email/L33b
Making time to look over your financial reports each month is an important task for any business owner. If you are not taking time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend you should start to. But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following: The Statement of Financial Performance - also known as the Profit and Loss report (P&L) or the Income Statement – tells you, as the name suggests, how your business is performing over a period of time, such as a month or a financial year. In broad terms it shows the revenue that your business has generated, less the expenses for that same period. In other words, it shows how profitable your business is. The Statement of Financial Position - also known as the Balance Sheet shows the value of the business’s Assets, Liabilities and Equity. Assets include things like money in bank accounts, Plant and Equipment, Accounts Receivable balances Liabilities include things like Bank loans and credit cards, Accounts Payable, and Hire Purchase balances Equity is the difference between your Assets and your Liabilities and includes Retained Earnings and Owner Funds Introduced Accounts Receivable Ageing report (Aged Receivables) - this shows how much money is still owed to the business as at a certain date in time, and is usually segmented as to how overdue they are, or sometimes by how far past the invoice date they are. Generally, you will have Current, 30, 60 and 90 days columns. Accounts Payable Ageing Report (Aged Payables) - this report shows who the business owes money to as at a certain date in time and, like the Accounts Receivable Ageing report, is usually segmented by overdue period. So why bother? Understand your business better - by looking at your Profit and Loss report monthly you will get a good picture of how your business is performing month by month and it gives you a better understanding of what makes up your profit. It can be helpful to compare periods, or to look at a month by month P&L, so you can clearly see on one page the revenue and expenses month by month. This also helps identify trends in your data and many also help to highlight anomalies in coding/categorising or unusual expenses or earnings. Accurate information for lending purposes – If you are applying for a loan or an overdraft, the bank or financial institution will look closely at both your Profit and Loss report and the Balance Sheet as a lot can be learned about a business by looking at these reports together. If you are unsure what some of your balances are in your accounts, get in touch and we can explain them further. Get paid quicker and reduce bad debts – by looking at your Accounts Receivable Aged Summary each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher the risk of it not being paid at all, so it is important to keep on top of this. Better relationships with your suppliers – Assuming you are entering your supplier bills into your accounting software (recommended for most businesses to get an accurate profitability figure) your Aged Payables report will alert you to any unpaid or overdue amounts. Supplier relationships are an important aspect of your business and paying on time is crucial to maintaining those relationships. Better cashflow – having an accurate understanding of how much money the business is owed, and how much money the business owes, can help with cashflow planning to ensure that there is enough money when needed. Additionally, understanding the trends of your business, its profitability drivers, its expenses, etc., can help to plan sales and marketing campaigns so that the revenue keeps coming in. Better business decision making – Your financial reports tell the story of your business and it’s important that you understand the story that they are telling you. The better you understand what’s going on in your business the stronger position you will be in to make better business decisions that affect the profitability of your business and its financial viability. If you would like to know which reports are relevant to your business, and you want to better understand what’s going on in your business, give us a call on 04 970 1182 so we can make a time to go through them with you. Your business success is important to us and we are here to help you.
As you may be aware, Xero has been working hard on a refreshed navigation and homepage (formerly known as the dashboard) to deliver a faster, cleaner, and more intuitive experience. The first stage - featuring the brand-new navigation - is set to launch sometime this month (September)! Here are the main updates you’ll spot in the new layout: Dedicated Sales and Purchases sections - no more digging around, everything you need is right where you’d expect it. Reports made simple - key insights are now just one click away, helping you stay on top of your numbers faster. Streamlined settings - settings are now visible across all menus, plus there’s a centralised page to keep everything organised. Smarter right-hand panel - this new hub gives you instant access to JAX (Xero’s new AI business companion), search, help, notifications, and apps - wherever you are in Xero. This revamped system helps you find what you’re looking for faster, move smoothly between tasks, and get even more value from your Xero subscription. The refreshed homepage (previously the dashboard) will launch later this year, bringing customisable widgets to give you quicker, more personalised business insights. We’ll keep you updated on when these changes go live. As Xero Platinum Partners, we’re already up to speed with the new navigation and ready to help you make the most of it. Whether you want a quick run-through, some training for your team, or simply reassurance that everything is where it should be - we’ve got you covered. If you need a hand, give us a call on 04 970 1182.
View our September 2025 General Ledger: View our September 2025 General Ledger: - 6 Powerful Reasons To Watch Your Financial Reports - Important Notices - Xero Tip of the Month: Xero’s New Navigation Refresh Coming Soon! - Audit Shield Insurance - Protect Yourself from a Tax Audit - Welcome to the Team: Breanna & Rachelle - Tax Question of the Month: What Happens to GST on Assets You Bought Before Registering? - IRD Upcoming Tax Payment Dates https://public2.bomamarketing.com/email/znK4
Thinking about selling your business? Whether you're ready to retire, change direction, or chase your next big idea - selling your business is a major milestone. And like any big move, preparation is everything. Here’s how to make your business more attractive to buyers - and get the best return: Get your numbers in order: Buyers want clarity. That means up-to-date books, clean financials, and a solid forecast. When your numbers tell a clear story, your business becomes more valuable and more trustworthy. Make your business easy to take over: Show potential buyers that your business runs smoothly, has reliable systems in place, and room to grow. A clear operational plan and documented processes make your business more appealing - and easier to hand over. Work with experienced advisors (That's us!): Selling a business can be complex, but you don’t have to do it alone. The right guidance helps you avoid costly mistakes, make informed decisions, and stay one step ahead. At All Accounted For, we help business owners get sale-ready with clean, well-organised financials and a clear understanding of their business’s true worth. With our support, you can move forward with confidence and clarity. Ready to take the first step? Call us on 04 970 1182 to book your appointment today.
Creating a mentally healthy work environment isn’t just a “nice-to-have” - it’s a crucial part of building a successful, sustainable business. Yet, when you’re juggling countless responsibilities as a business owner, it’s easy to put mental health on the back burner. This is a gentle reminder of why fostering mental wellbeing at work benefits everyone - from your employees to yourself: When people feel mentally supported and valued, they’re better equipped to manage daily stresses, stay motivated, and maintain positive relationships with colleagues. This not only boosts productivity but also creates a more collaborative and enjoyable workplace. Taking time to care for your own mental health as a leader sets the tone for your entire team. Your wellbeing influences your decision-making, creativity, and resilience, which directly impacts your business’s success. Investing in mental health isn’t just good for people, it’s smart for business. Let’s prioritise wellbeing as an essential part of our work culture, helping everyone thrive both personally and professionally.
For many SMEs, recurring subscriptions are one of the sneakiest money leaks. They’re small, automatic, and easy to forget - until they quietly add up to thousands each year. Now’s the perfect time to do a quick subscription audit. Look out for: Duplicate subscriptions Outdated software plans Auto-renewals you didn’t notice Tools your team no longer needs These little costs can seriously stack up. A 15-minute check might save your business hundreds - even thousands - every year. If you’re getting value from every subscription, that’s great! But in our experience, most businesses are paying for more than they use. Not sure where to start? We’d be happy to help you review your expenses and sharpen your spending. Get in touch today - your bottom line will thank you!
