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/
The beginning of a new year is like hitting the reset button, right? If you're a business owner, this is the perfect time to take a step back and think about where you're at and what you want to achieve in the upcoming year. Setting goals is like the secret sauce for personal and professional growth. Whether you're dreaming big or just plotting out some day-to-day projects, like getting paid faster or tightening up your expenses, it's all important. Maybe you're even thinking about automating some processes or venturing into new markets. Whatever your game plan, the new year is your canvas. Having a clear vision and tangible goals is the key to making those big dreams a reality. So, let's dive into some tips to kickstart your goal-setting journey: Review the year that's been: Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business efforts. Envision your future: Picture where you want to be in the next five or ten years. How can your business help you achieve those life goals? Having a clear endpoint makes it a whole lot easier to set goals that align with your vision. Set measurable goals: Wishy-washy goals are like trying to catch a cloud. Instead, aim for goals you can measure. Think about the key metrics in your business, like a 3% increase in net profit each year, a 2% cut in expenses, or grabbing two new customers monthly. Specific targets make tracking progress a breeze. Develop a plan for each goal: Once you've got your goals lined up, create a game plan. This could be a simple list or a brainstorming session with your team. Having a clear plan keeps you focused and ready to roll. Monitor your progress regularly: Keep tabs on how you're doing. Set reminders or sync up with your invoicing cycle. Regular check-ins help you spot areas for improvement and keep those fresh ideas flowing. Celebrate your achievements: Don't forget to celebrate those wins along the way. Treat yourself or your team to something special. It could be a morning tea, a day out of the office, or even planning an end-of-year bash. Find something that brings you joy without breaking the bank. We can help: Not sure where to start? We’re here to help! We can assist you in planning and tracking the key steps that will keep your business moving forward. At All Accounted For we pride ourselves in offering our clients a progressive approach in all aspects of their business. Whether it's working through a financial model, providing support to execute your plans, or helping to identify your advantages - together, we can help you make headway to reach your business goals. When you conduct a past-year review with one of our experienced advisors, we will: Run through your current business plan Provide feedback on where you are heading and talk through the opportunities you might not see in your own business Provide valuable insights for this year's goal setting Implement a tailored business plan Keen to learn more? We offer many business advisory services including: Business Reporting: monthly, bi-monthly, or quarterly Cash Flow Forecasting Budgeting Business Valuations Software Systems & Apps: setups and assistance If you’d like to chat about what you can do differently this year to enable your business to thrive, give Ben Duflou a call on 04-970-1182 to discuss how we can help.
Back in September, we announced that Xero was working on a refreshed navigation and homepage (formerly the Dashboard) to deliver a faster, cleaner, and more intuitive experience. With the navigation changes now live, Xero is moving to the next major update: the fully redesigned homepage. The new homepage is being introduced organisation by organisation over the coming months and will continue through to March 2026, so you may begin to see the updated layout appearing soon. Here’s what’s new in the homepage refresh: More meaningful insights: Xero has upgraded existing widgets and introduced new ones such as tasks, recently paid invoices, and net profit/loss - giving you important financial information at a glance. Customise your layout your way: You’ll be able to drag, drop, resize and reorder widgets so your homepage reflects what matters most to you. Your layout is unique to your login and won’t affect anyone else in your business. Time to adjust: If you’re not quite ready for the new look, you can temporarily switch back to the old dashboard for up to 24 hours before Xero automatically returns you to the new layout - giving everyone the chance to ease in. As always, if you have any questions or would like help navigating the changes, please don’t hesitate to call our team on 04 909 7729 . We’re here to support you. If you’d like to learn more about these upcoming changes, Xero has recently shared a helpful overview, which you can access by clicking HERE .
View our January 2026 General Ledger: - Welcome 2026 - Important Notices - Goal Setting for 2026: Planning for Success - Xero Tip of the Month: Xero’s New Homepage Refresh Coming Soon! - Tax Question of the Month: New Year Tax Health Check: The Fringe Benefit Tax on Holiday Perks - IRD Upcoming Tax Payment Dates https://public2.bomamarketing.com/email/e9Ej
Are your end-of-year preparations in order? With only 8 working days left until Christmas, time is running out! If you haven’t already, now’s the time to take a good look at your festive season cashflow and plan ahead. Juggling cash flow can be particularly tricky over the Christmas and New Year period, when many businesses close and consumers head away on holiday. With a little forward planning, you can make sure you’ve got your ducks in a row to keep your business running smoothly. As a reminder, we’ve included our short to-do list we shared in our November General Ledger newsletter: Create a staff roster to manage staff leave over the holiday season, making a note of when each staff member will be working and when they are taking a break so you've got enough hands on deck over the holiday period. Pay any outstanding invoices or upcoming invoices. Plan for your upcoming tax payment obligations. Schedule your staff pay runs if you aren't able to do it on the day. Send out your invoices early - this will allow you and your client to have your accounts sorted before you close. Review your work in progress (WIP) - plan to complete jobs or services that can be invoiced and paid (remember if you don’t invoice and get paid before the break, you may not see the money for another month). Stock-take - Do you need to order in goods now to be able to complete work in progress? Check that there is stock on hand available. Plan your 2026 goals: Your review of 2025 goals will give you a good insight into your next steps heading into 2026, so now is the time to write them down. We’re here to help If you’re struggling with your finances and need assistance to tie up any loose ends and answer any queries you may have, All Accounted For can help. We have a talented, highly knowledgeable team of professionals ready to assist you. Get in touch with our team today on 04-970-1182 so we can make your holidays as stress-free as possible.
Xero has just launched a powerful new feature called JAX (Just Ask Xero), an AI-powered assistant designed to make navigating and using Xero even easier. Whether you’re trying to find a specific report, understand a transaction, or get help with settings, simply type your question into the JAX assistant. It will provide quick, relevant answers or guide you directly to the section you need, saving you time and reducing the need to search through help articles. What can you ask JAX? Here are just a few examples: “How do I reconcile a bank transaction?” “Where can I find my aged receivables report?” “How do I add a new user to my Xero account?” JAX is currently being rolled out across Xero, so if you don’t see it yet, it’s on the way. Look for the JAX icon or search bar in your Xero dashboard and give it a try - it’s a smart, fast way to get the most out of Xero with no digging required.
View our December 2025 General Ledger: - Merry Christmas & AAF Out-Of-Office Dates - Important Notices - Reminder: Financial Preparations for the Holidays - Xero Tip of the Month: Introducing Xero’s New AI Assistant - Jax - Tax Question of the Month: Taxing Holiday Pay for the Christmas Shutdown - IRD Upcoming Tax Payment Dates https://public2.bomamarketing.com/email/0eXm
Six Weeks ‘Til Christmas - Time to Get Your Ducks (and Dollars) in a Row! Yes, you read that right, Christmas is only 6 weeks away! For many small businesses, the countdown is officially on. Between juggling staff leave, final invoices, and festive plans, this time of year can sneak up faster than Santa on Christmas Eve. Now’s the perfect time to: -Plan your cash flow - Will your business experience a quiet period or a sales surge? Make sure you’ve got enough funds to cover the downtime. -Check your payroll & leave balances - Avoid last-minute headaches by locking in pay runs and holiday rosters early. -Review your budgets & goals - With the new year just around the corner; set yourself up for success by reviewing your financial targets. The earlier you prepare, the smoother your Christmas break (and January restart!) will be. Need a hand making sense of the numbers or planning ahead? The AAF team is ready to help you finish the year strong and step into 2026 with confidence. Call us today on 04 970 1182 to book your pre-Christmas financial check-in.
Are you undercharging for your services? It’s a tricky question, especially if you’re in a niche industry or running your own contracting business. With costs rising across the board, it’s worth checking in on whether your fees are keeping pace. Here are five signs you might be undercharging Nobody ever questions your quotes - Do all your new clients accept your quotes or charges without asking any questions, requesting a breakdown or wanting a discount? It’s possible they’re delighted to be getting such a great deal. You run off your feet but you can’t afford to get help - When you’re working yourself to the bone, but there’s not enough money left over to employ someone to help you, your prices are too low or something else in your business needs to change. Your prices have been the same for two years or more - In most industries, prices increase just slightly each year. Leave your prices flat for too long and you’re not keeping up with the market; make sure you review your fees annually. You’re overbooked - When business is booming and there’s no room for new clients, it’s time to raise your prices. Clients don’t treat you as well as they should - When clients think they’re paying peanuts, they’ll often take you for granted. They don’t see your time as valuable, so they feel free to mess you around. So what should you be charging? Finding your pricing sweet spot takes time and a bit of research. Start by looking at your competitors and talking to others in your industry. At All Accounted For we see pricing struggles come up often. If you’d like some perspective, we can share what we’ve seen across similar industries and help you rethink your approach. A small adjustment to your fees could make a big difference to your cashflow, capacity, and client relationships.
To grow your business, you need access to additional capital. And one of the traditional routes to business finance has often been the big banks. But with the prudential regulation system making it mandatory for New Zealand banks to keep large cash reserves in place, the banks are tightening their belts and lending less. That’s good for the stability of the bank’s financial governance, but not so good if you’re a Kiwi small business owner that needs extra capital and a solid loan from your bank. The Reserve Bank is holding a consultation on how much capital NZ banks should hold, so lending may ramp up again in the future. However, there is another option. The past few years have seen considerable growth in the ‘alternative lending’ market – with specialist business lenders and online lenders now available. Let’s look at what alternative lending is and the key pros and cons of this kind of finance. What are alternative lenders? Alternative lenders are non-bank financial institutions, like fintechs and online platforms. As an ‘alternative’ to the big banks, they provide quicker, more flexible sources of capital, giving you an agile way to bring extra funding into your business. These non-bank lenders offer diverse products, such as short-term business loans, lines of credit and invoice financing, helping you cover cashflow gaps and support your growth. The pros and cons of using alternative lenders If you’re in urgent need of a cash injection, alternative lending from a non-bank is one option to consider when looking for routes to funding. Let’s examine the pros and cons of accessing finance from a non-bank: Pros of alternative financing: Faster and more flexible lending process: Alternative lenders often have streamlined online applications and less rigid lending criteria. This makes approval and funding generally much faster than traditional banks – a crucial difference when your cashflow needs are urgent. Higher approval rates: Non-banks are generally more willing to lend to businesses that traditional banks have declined. This is good news if you’re an early stage startup or the business has a shorter trading history, lower credit score or fluctuating income. Diverse and tailored products: Alternative lenders offer a wide range of specialised products, such as lines of credit, invoice financing or short-term loans. That’s good news if you want to customise your finance to fit a specific business need. Cons of alternative financing: Higher interest rates and fees: Due to the increased risk they take on, alternative lenders will typically charge higher interest rates and can have additional fees – such as drawdown fees. This may make the total cost of borrowing more expensive than with a traditional bank. Less regulatory protection: Unlike consumer loans, business loans from these lenders may not have the same protections under the Credit Contract and Consumer Finance Act (CCCFA). If the worst happens, this can leave you exposed and with limited protection in place. Risk of personal guarantees: Many alternative lenders require a personal guarantee, meaning that if your business defaults on the loan, you become personally liable for the debt. A personal guarantee puts your personal assets (such as your home) at risk. Talk to us about finding the right finance for your business: A workable financial strategy factors in the need for capital. With sales, revenue and cashflow still challenging, having a route to extra funding is vital. As a firm, we’re not authorised to give you direct financial advice on which banks or alternative lenders to partner with, you’ll need a Financial Advice Partner (FAP) for this. But we can help you understand your cashflow and working capital needs, and help you build a funding strategy that meets the requirements of your broader growth strategy.
