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  • How to Conduct a Financial Health Check for Your Business This 2024

    If you’re a new business owner, one of the hardest lessons you may be learning right now is just how difficult it can be to determine the financial health of your business. All the more if you don’t have bookkeeping skills or a general finance background; you may not even understand what all those figures you’re recording (or should be recording) actually mean. Now’s the time to brush up on your financial housekeeping and learn how to do a serious financial health check. Doing so will increase the chances of your business succeeding in 2024 and beyond. To that end, here are the basic steps for conducting a wellness check on your budding business endeavour and building a more solid foundation for your financial decision-making: 1. Gather Your Financial Statements The first step is to collect all your business’s most recent financial documents, particularly its balance sheets, income statements, and cash flow statements. While many other documents could be used to supplement these, these key statements are usually enough to provide a fair idea of the business's financial status. Of course, for this step to happen, you will need to have been documenting your business’s transactions accurately. Whether you’re having problems keeping up with your books or simply want to have a good head start when incorporating your business, be sure to get in touch with accountants Dunedin entrepreneurs depend on. 2. Analyse Your Profitability The most important question you’ll need to ask during your financial health check is, of course, whether your business is actually making money. To get an idea of this, you or your finance team must calculate your gross profit margin, net profit margin, and return on investment (ROI). Assuming your books are accurate, these key profitability ratios will indicate how efficiently your business is creating profits from the money that is being spent on it. 3. Assess Your Liquidity Look at your business’s current ratio (current assets / current liabilities) and quick ratio (current assets - inventory / current liabilities) to evaluate your business’s available cash reserves. This will give you an idea of whether it’s capable of easily paying off short-term obligations or if it might have to renegotiate to get some breathing room. 4. Examine Your Cash Flow As far as financial performance goes, cash flow is arguably the most important indicator of a business’s viability. A lot of positive cash flow relative to outflows usually indicates that your organisation is in good shape, especially when coupled with low debt levels. Using your cash flow statement as a guide, pay attention to operating, investing, and financing activities to see if there are opportunities for cash flow optimisation. 5. Review Your Debt Levels Your business's debt-to-equity ratio and debt-to-assets ratio directly indicate its leverage and relative financial risks. Generally speaking, high levels of debt relative to equity or assets are not ideal. However, these figures should be contextualised with other metrics like cash flow and liquidity to provide you with a more complete idea of your business’s health. 6. Evaluate Your Inventory Turnover The inventory turnover ratio indicates how quickly inventory is sold and replaced, showing potential waste or slow sales that tie up cash and impact profits. In retail, the idea that “inventory is money” is usually taken as truth. However, the same general principle applies regardless of your business type, as inventory not only costs money to acquire but also to maintain. 7. Check Your Accounts Receivable While receivables are assets, they do very little for you unless you’re able to collect them. Your accounts receivable turnover ratio and average collection period can give you insights into the efficiency of your collection efforts, perhaps revealing the ideal purchase options you need to offer your customers. 8. Make Apples-to-Apples Comparisons Your business’s performance must be placed within the wider contexts of its industry. For instance, you can hardly make a fair comparison between the financial performance of a food kiosk and that of a residential real estate broker. Fortunately, financial ratios of businesses similar to yours are usually available for review, giving you an idea of how your operations compare. You can use them as a basis for performance metrics to aim for and to glean insight about potential improvements you can implement in your organisation. 9. Identify Areas for Improvement Based on your analysis of all the previously mentioned considerations, look for operational areas where you can reduce overheads. This can involve anything from developing new offers that boost sales figures to improving your marketing campaigns to reduce the cost per sale. Regardless, these improvements should be implemented without seriously compromising on quality or your business's overall vision. 10. Create an Action Plan Once you know what your main challenges will be, it’s now up to you to develop plans to address them. Make sure that the plans are not merely hypothetical, with specific goals and strategies to mitigate or maximise different challenges and opportunities. 11. Monitor and Adjust Your Financial Approaches Having a set action plan is great since it allows you to avoid distractions and just focus on one long-term goal. However, you must also be flexible enough to readjust your course according to whatever may be happening in your market. To stay on track and avoid serious risks, take some time each month to look at financial performance and adjust your strategies as needed. The frequency of your financial wellness checks should be around every quarter and probably not more frequently than that. This should give you enough headspace to perform everyday tasks and still be frequent enough to give you a heads-up on any looming challenges. Contact Target Accounting to Help You with Your Business’s Financial Health Checks Now that you know what you need to do, you’ll have a more realistic picture of your business’s financial health, making it simpler to position it for a repeatable pattern of growth and success. If you’re having difficulty conducting any of these steps, be sure to contact Target Accounting, a company with a proven track record for helping Dunedin businesses with their financial performance. On top of our accounting services, consider exploring our business advisory services, HR services, accounting software integration services, and international client services wherever they apply. Let us help you stay on the mark with your business’s financial objectives!

  • How to Cultivate a Growth Mindset in Your Startup’s Early Days

    For anyone who has the privilege to do so, starting a business will be a thrilling and nerve-wracking adventure. You may be able to recall the excitement of bringing your entrepreneurial vision to life but also your own uncertainty at the many challenges that lie ahead. As your business begins to grow, it will be easy to find yourself consumed by the day-to-day grind and to end up focusing solely on the present without considering the future. In the midst of this hustle and bustle, you may overlook the importance of nurturing and cultivating a growth mindset—an outlook that’s essential for driving the long-term success of your startup. Do you feel stuck in a rut about how to grow your business as opposed to merely keeping it alive? Here are some tips for maintaining the spark of the growth mindset in your day-to-day operations: 1. Welcome Challenges and New Ways of Doing Things Challenges are a natural part of entrepreneurship, serving as opportunities for growth and resilience-building. Instead of avoiding them, you should build up your determination to face them head-on. Every challenge met means another crucial improvement in your overall business resilience. The reality of managing a startup includes financial constraints, market competition, scalability issues, and varying team dynamics. Your efforts to plan strategically, adapt to changing conditions, and call for the support of professionals will help you broker a supportive company culture that’s focused on long-term goals instead of momentary ones. Having a reliable business partner and solutions provider will definitely help you through challenges that are difficult to overcome yourself. If you’re based in the area, look for seasoned Dunedin accountants to keep you on top of accounting woes. The team at Target Accounting is particularly well-versed in guiding startups through their money matters. 2. Take Constructive Feedback with Grace Constructive feedback provides valuable insights for improvement, which any startup should aspire for. If you receive constructive feedback from your mentors, service providers, or customers, be sure to acknowledge it with an open mind. Then, seek to understand the underlying intention and take actionable steps towards improvement. In the case of your startup, constructive feedback may come in the form of suggestions for product enhancement, customer satisfaction surveys, and performance evaluations. Use these as the basis for refining your strategies, enhancing your entrepreneurial skills, and ultimately driving the growth of your startup. 3. Acknowledge and Grow from Failure When you experience failure, you can either walk away from the whole venture or see it as a teaching moment for your business’s growth. As a new entrepreneur, you should also expect failure to occur more often than you’d like, potentially hovering over nearly every business decision you make. Even the stories of the most successful startups have rejections and failed partnerships in their chapters. The entrepreneur who learns from their mistakes will not really fail, in the absolute sense of the word; with every fall, they’ll learn and grow wiser and stronger. 4. Develop Your Grit and Resilience The startup scene will always be an unpredictable one. A startup entrepreneur needs grit and resilience as their shield to weather the inevitable challenges and setbacks along the way. Developing grit and resilience is important for enduring the rollercoaster ride that is startup entrepreneurship. These two qualities will empower you to rebound from setbacks, surmount obstacles, and maintain focus on your vision, even amidst the greatest adversity. Try to set ambitious goals, seek inspiration from role models who became successful doing work similar to yours, and build a supportive network for you and your staff. You can also strengthen your collective grit and resilience by embracing failure as a learning opportunity, maintaining a positive outlook, and focusing on long-term solutions instead of short-term problems. 5. Seek New Growth Opportunities A growth mindset encompasses more than just reframing negatives into positives. It also involves actively seeking opportunities for expansion and development—a vital component for startup businesses that really want to make it. This entails identifying untapped markets, making an effort to innovate products, and looking for more strategic partnerships that can drive your business forward. Make time to attend industry events, network with your peers, or scour new markets. This is what will keep your business agile and ahead of the curve. The goal should be a dual mindset of calculated risk-taking and experimentation, which can take advantage of both expected and unexpected avenues for business growth. 6. Build a Team With the Same Growth Mindset To develop a company culture grounded in a growth mindset philosophy, you’ll also want to hire individuals whose vision aligns with the startup's own. Surround yourself with talented, motivated staff members who share your values and drive for innovation and creativity. A diverse team will bring varied perspectives, experiences, and skills to the table, so make sure that diversity and inclusion are part of the formula. Lead a culture that draws its strength from collaboration, support, and mutual growth, and your startup is sure to become a contender in the future. Again, it may be difficult at first to recall the growth mindset when your startup’s gears really start turning. But through the tips above, try to pursue it with dedication and consistency. For accounting and business advisory services that can help you put the growth mindset at the fore of your startup operations, contact Target Accounting now.

  • Accounting vs. Bookkeeping: What Every Entrepreneur Should Know

    Finances are the lifeblood of any business, and an entrepreneur who doesn’t have a clear grasp of their business’ cash flow and expenses is at great risk of incurring losses that can blindside them later. No matter which industry they operate in and how big their company is, every business owner should keep track of its financial transactions and understand how its resources circulate. Well-kept financial records will be easy for entrepreneurs to refer to if they need to make any big financial decisions in the foreseeable future. If you own a small business in New Zealand, you can enlist the help of bookkeepers and accountants Dunedin businesses and other NZ-based companies trust. At first glance, you might think that these two roles are interchangeable. However, both actually have quite different roles to fulfil in your business operations. Here’s a quick overview of what you should know as an entrepreneur regarding the matters of accounting and bookkeeping: Key Differences between Accounting and Bookkeeping To put it simply, bookkeeping pertains to recording the day-to-day transactions of a business, while accounting is concerned with the bigger financial picture. If your business happens to be a grocery shop, for example, then your bookkeeper would be concerned with the sales you made for the day and your expenses. Knowledge of those things would facilitate your bookkeeper’s operations that day. Meanwhile, your accountant should be tasked with looking over the shop’s financial reports to gauge whether your business remains profitable and what can be done to improve its financial prospects. Another key difference between the two is their qualifications. In addition to being extremely organised and detail-oriented given the nature of their job, bookkeepers are mostly encouraged to obtain bookkeeping qualifications or to join bookkeeping organisations to increase their credibility. Meanwhile, there are more specific certifications for accountants in NZ, such as that of a Chartered Accountant (CA) or a Certified Practising Accountant (CPA). You should do your best to look for one who has the proper certifications so that you can be confident that your money matters are in capable hands. Despite their differences, accountants and bookkeepers work closely together. Bookkeepers are tasked to be thorough with keeping track of any form of cash flow, and accountants will likewise need complete bookkeeping records to ensure they have an accurate idea of whether the business’s operations are financially sound or not. The Key Responsibilities of Accountants and Bookkeepers Let’s also break down further what the responsibilities of bookkeepers and accountants are. In bookkeeping, the main task is to ensure daily financial transactions are recorded accurately. This includes keeping track of receipts issued, invoices sent, and bills paid on behalf of the business. A bookkeeper may also be tasked to manage staff payroll. Bookkeepers often keep general ledgers for their records, although nowadays, there are various online bookkeeping solutions available should the business opt for a digital route. Accountants are mainly tasked with analysis work. Upon reviewing the records dutifully kept by the bookkeeper, an accountant will be able to evaluate and offer advice regarding the financial health of your business. This can be invaluable if your business is on the cusp of making important financial decisions; after all, you need to check first if your finances are solid enough to handle any changes that you may want to implement. An accounting company also offers taxation services to help you comply with government requirements. This includes filing Inland Revenue Department (IRD) returns, goods and services tax (GST), income tax, and more. The Benefits of Hiring Both an Accountant and Bookkeeper for Your Business As an entrepreneur, you might be thinking: “which one do I need, a bookkeeper or an accountant?” The answer is that you likely need both, especially if your business growth is on the uptick. It would be a huge oversight to not keep a record of every transaction completed each day, and hiring a dedicated bookkeeper would likely be better than you doing it yourself. Likewise, an accountant would have in-depth expertise on how to improve your business’s financial health. As an entrepreneur, it’s easy to get caught up with daily operations and miss the big picture. This is where your accountant will come in. They can glean data from your bookkeeper’s records that you otherwise would’ve missed or not thought of as important, and they’ll be able to prepare detailed business forecasts that can open up new opportunities for you. Your accountant can also discuss current business trends with you and give you insights as to how these can influence the financial growth of your current venture. Preparing for the Future Both bookkeeping and accounting practices have evolved because of technology, so it’s also in your best interest to hire a bookkeeper or accountant who’s knowledgeable about the latest solutions in the financial industry. This can help streamline them, streamline the recording process and allow for easier perusal of data since digitised copies would be readily available to you. The most popular solutions currently being used are QuickBooks and Xero. The team at Target Accounting understands that you only want the best for your business. Our services will help you ensure that your business’s financial outlook remains positive. Contact Target Accounting today for an accounting approach that will always be on the mark.

  • 7 Financial Practices for Building Good Relationships with Suppliers

    Strong supplier relationships are key to keeping small businesses afloat in today’s rapidly evolving market. These relationships are the backbone of successful operations, as they provide the materials or products necessary for your business. Furthermore, they also open up significant opportunities for business growth through better pricing, a more reliable supply chain, and access to innovations. If you can maintain good relations with your suppliers, you’ll be assured of a mutual understanding on how to do business well—and a sense of collaboration that can weather the storms of market fluctuations and supply chain disruptions. To nurture these relationships with your suppliers, you’ll need to practise sound financial management. Suppliers value partners who are transparent, fair, and consistent in their dealings, especially where large amounts of money are concerned. Good financial practices signal to your suppliers that your business stands on solid ground and that it’s capable of enduring challenges while maintaining an honest and trustworthy partnership. This foundation will pave the way for negotiations that can lead to improved terms and conditions for both parties, which would only further cement a relationship built on mutual respect. We at Target Accounting are happy to provide small business accounting Dunedin residents and those located all over New Zealand can depend on. We’re also well-positioned to offer expert financial advice to entrepreneurs looking to improve supplier relations. Let’s examine seven practical financial practices you can apply to your business operations today: 1. Timely Payments Imagine the positive impact of receiving a payment not just on time but perhaps even earlier than expected. This practice will do wonders for your relationship with your suppliers, as it shows respect for their financial needs and stability. Your effort to make prompt payments will help you build trust with your individual suppliers as well as put you in a better position for favourable terms in the future. Take advantage of this simple yet powerful way to demonstrate your reliability as a partner. 2. Transparent Communication Honesty is the cornerstone of any strong relationship, and this holds true in the business world as well. Keeping your suppliers in the loop about your financial health and future plans can help manage expectations on both sides. If there’s a bump in the road, such as a delay in payment or a sudden change in order volume, communicating this early can help mitigate any potential strain on the relationship. Being transparent with your suppliers can encourage them to trust and cooperate with you even in difficult times, and it may also motivate them to stay with your business long-term. 3. Mutually Beneficial Payment Terms When determining payment terms, it’s crucial to find a middle ground where both parties feel their needs are being met. Try to negotiate payment terms that afford you flexibility during tighter periods while also considering the financial pressures your suppliers may face. This will go a long way in creating a partnership where both sides can thrive. Whether it's agreeing on extended payment terms during your off-peak season or securing discounts for early payment, these arrangements should aim to benefit both your business and your suppliers, so that each relationship remains sustainable and productive. 4. Volume Commitments A locked-in commitment to purchase specific volumes over time is a great way to demonstrate your reliability to your suppliers. This approach will send the message that your interactions are not merely transactional. It will also speak to your intent to forge a lasting partnership with the supplier in question. Guarantee a certain volume of business, and you can provide your suppliers with the stability they need to plan their production schedules and manage their inventory more efficiently. In return, your suppliers may see fit to offer better pricing or terms that reflect the reduced risk and guaranteed sales volume of your arrangement. Such commitments can be particularly valuable in negotiations, as they help to secure long-term benefits for both parties and reinforce the mutual support essential for a thriving business relationship. 5. Regular Reviews and Feedback Regular review meetings with your suppliers can help lay the foundation for a strong long-term partnership. Treat these sessions as opportunities to share feedback, address concerns in real time, and explore ways to improve processes and outcomes. Be proactive about establishing a culture of transparency and continuous improvement with your suppliers, especially so that you can all adjust to changing market conditions and to each other's evolving needs. An ongoing dialogue will ensure that both sides are aligned and can address any issues before they escalate. 6. Joint Planning and Forecasting Sharing your business forecasts might seem like giving away part of your playbook, but in a partnership built on trust, it's a strategic move. Consider letting your suppliers in on your future plans and expected demands, which will better prepare them to meet your needs. This could mean securing necessary materials in advance or adjusting production schedules to ensure timely delivery. In turn, planning together can lead to more efficient operations and potentially lower costs. 7. Loyalty and Incentives Demonstrating loyalty to your suppliers can pay substantial dividends. You could provide incentives for consistent performance, such as guaranteed volume orders or longer-term contracts. These gestures will show them that you value the relationship and are committed to its growth. In response, suppliers are often more willing to offer preferential rates, invest in quality improvements, or provide first access to new products. Loyalty breeds loyalty and creates a positive feedback loop that strengthens supplier and client relationships. With these practices in your pocket, your business can build a solid foundation with your suppliers, characterised by mutual respect, trust, and cooperation. This foundation will not only enhance day-to-day operations but also help build a resilient supply chain capable of weathering big challenges and capitalising on the most profitable opportunities. We at Target Accounting are happy to assist our client businesses in matters pertaining to their financial health, including those that relate to supplier relationships. Contact Target Accounting today to learn more about the accounting and business advisory services we offer.

  • 7 Financial Mistakes to Avoid When Running a Small Business

    It’s not unusual for small businesses in New Zealand to face financial challenges, especially when they’re just starting out. These issues typically stem from limited resources, fluctuating cash flow, and the need to make critical decisions with long-term implications. The input of a financial expert, such as a small business accountant Queenstown entrepreneurs trust, can be quite useful in helping both seasoned and newbie enterprise owners navigate situations that can lead to these problems. At the same time, it’s a must for business owners like you to be aware of common financial blunders so that you can steer clear of them as much as possible. Here are some of the issues you should make an effort to avoid while setting up or running your own small business: 1. Poor Cash Flow Management Poor cash flow management occurs when businesses struggle to maintain a healthy balance between cash inflows and outflows. It often manifests as struggles to pay bills on time, delays in receiving payments from customers, or unexpected expenses cropping up without the necessary funds to cover them. To avoid issues due to poor cash flow, your small business should learn how to create cash flow forecasts, negotiate its payment terms with suppliers, and incentivise early payments from customers. Such strategies will help you ensure that you have enough liquidity to sustain operations and seize growth opportunities in a timely manner when these crop up. 2. Underestimating Costs Many businesses also regularly fail to forecast and budget expenses accurately, which can result in financial strain and unexpected costs. This often happens due to insufficient research about the costs of products and services, unrealistic assumptions about monthly expenditures, and failure to account for hidden or variable costs. For example, a business may embark on a new project without fully accounting for all the expenses involved, such as labour and overhead costs. As a result, the organisation may find itself running over budget and struggling to meet its financial obligations. Conducting thorough cost analysis before committing to projects is key to accurately estimating costs. It’s also a must to factor in potential contingencies and to regularly review and update budgets as expenses change. 3. Excessive Spending Spending excessively can eat into profits and put small businesses at risk of financial instability. Businesses, unfortunately, do this from time to time by carrying out unnecessary office renovations or extravagant marketing campaigns that yield little to no return on investment. There are also organisations that invest heavily in expensive equipment without considering more cost-effective alternatives, like buying second-hand or prioritising essential expenses instead. If you want to keep your company’s spending under control, you have to make it a point to establish clear spending guidelines. You also need to prioritise activities that offer the highest return on investment and regularly review your expenses to identify areas for cost savings. 4. Ignoring Budgeting Akin to navigating without a map, ignoring your budget will make it very easy for your business to lose sight of your destination and veer off course. Without a budget, it will be difficult to allocate resources, track expenses, and plan for the future. This can even make it challenging for your enterprise to cover operating costs. To avoid this, your business should strive to develop a lean and practical budget based on your historical data and on realistic future projections. This effort should be coupled with regularly monitoring your financial performance against budgeted targets and adjusting your spending as needed to stay on track. Embracing budgeting as a strategic tool will also enable your enterprise to make the most responsive decisions and achieve its financial goals. 5. Mixing Personal and Business Finances Mixing personal and business finances is a recipe for confusion and potential legal and tax headaches. Commingling your personal finances with that of your business makes it more challenging to track business expenses, prepare accurate financial statements, and comply with tax regulations. If you use your personal credit card to cover business expenses, for example, then it will be difficult to distinguish between your personal and business transactions and to be conscientious about your company’s actual cashflow. It’s good practice to maintain separate bank accounts and credit cards for business and personal use. You should also establish clear procedures for reimbursing personal expenses and keep detailed records of all your small business’s financial transactions. These steps will make it much easier to ensure clarity and accuracy in your financial reporting and minimise the risk of compliance issues. 6. Overreliance on Debt While business loans can empower your enterprise to grow and expand, you should make an effort to avoid overreliance on debt. Depending too much on borrowed funds can leave your business vulnerable to economic downturns and interest rate fluctuations. Ultimately, this can put the enterprise’s financial stability at risk. Before taking out a loan, then, carefully evaluate your financing options and consider alternative sources of funding such as equity investment or grants. You also shouldn’t be remiss in developing and following a sustainable debt repayment plan. 7. Not Monitoring Financial Performance Without regular monitoring, your business will be unable to assess its financial health, which can mean that it might miss warning signs of trouble. For instance, there’s no shortage of businesses that failed because they did not notice declining profitability or cash flow problems until it was too late to take corrective action. Stay on top of your finances by setting key performance indicators (KPIs) to track your performance. Revenue growth, profit margins, and cash flow ratios are often used as KPIs. Regularly reviewing these will better equip you to identify trends, spot potential issues early, and make timely adjustments to your enterprise’s operations. Your ability to steer clear of these financial mistakes will factor into the success and sustainability of your small business in NZ. Sound financial management practices, as well as the advice of experts and professionals, will go a long way towards improving your enterprise’s financial health and achieving your organisation’s long-term goals. If you need expert financial advice or accounting services for your small business in Queenstown, reach out to our team at Target Accounting. We’ll help you carry out tried-and-tested strategies to avoid these financial blunders that many business owners know way too well. Get in touch with us at Target Accounting today.

  • The Cash Conversion Cycle (CCC): What Every Entrepreneur Should Know

    In New Zealand, small and medium-sized enterprises account for 97 per cent of all businesses. Their earnings comprise 25 per cent of the nation's GDP, and Kiwi SMEs are responsible for 28 per cent of the country’s employment. In short, SMEs are vital to the economy, and entrepreneurs running them need all the help they can get to ensure their businesses survive and do well in this increasingly challenging economic environment. If you’re part of this sector, one way to realise your business goals is to ensure that you have an understanding of the basic accounting principles that have a massive impact on your business. The technical know-how, as well as in-depth financial matters, should be handled by your accountants. Dunedin entrepreneurs like yourself, however, should still be knowledgeable of accounting best practices and have an inkling about how these factor into the best financial decisions for your business. On that topic, cash flow, or the movement of money going in and out of the business, is often seen as an overall indicator of its financial health. But behind the scenes, a solid metric called the cash conversion cycle (CCC) will show a more detailed picture of when investments are converted into money that your business actually earns. To illustrate, here’s a briefer on everything a Kiwi SME owner needs to know about the CCC. What Is the Cash Conversion Cycle (CCC) All About? At its core, the Cash Conversion Cycle (CCC) is a financial metric that measures the time it takes for your company to convert its investments in inventory and other resources into cash flows from sales. In simpler terms, it encompasses the journey from spending cash to receiving cash. For instance, if your business involves manufacturing clothes, the CCC will be the time period or the days from when you bought fabric and thread to the time that you got paid by the retail outlets you supply. The lower the CCC is, the better it is for your business since this indicates a faster turnover. This cycle comprises three key components, namely the days inventory outstanding (DIO), days sales outstanding (DSO), and days payables outstanding (DPO). To compute for your CCC, you’ll need the DIO, DSO, and DPO values. The formula can be expressed as: CCC = DIO + DSO − DPO The days inventory outstanding (DIO) represents the average number of days it takes for your company to sell its inventory. A lower DIO means a faster inventory turnover. The formula for the DIO is as follows: DIO = (Average Inventory / Cost of Goods Sold) x 365 days where: Average Inventory = (Beginning Inventory + Ending Inventory) / 2 Cost of Goods Sold = (Beginning Inventory + Purchases During the Period) — Ending Inventory Meanwhile, the days sales outstanding (DSO) measures the average number of days it takes for your company to collect payment after making a sale. This time, a lower DSO suggests faster cash collection. For the DSO, here’s the formula: DSO = Average Accounts Receivable / Revenue Per Day where: Average Accounts Receivable (AR) = (Beginning AR + Ending AR) / 2 The last metric you need is days payables outstanding (DPO). This indicates the average number of days it takes for a company to pay its suppliers. If you get a high number of days, it means it takes longer for your business to pay your suppliers. DPO = Average Accounts Payable / Cost of Goods Sold where: Average Accounts Payable (AP) = Beginning AP + Ending AP How Does the CCC Impact Your Business? The CCC has a profound impact on your business. It influences everything from the health of your cash flow to your operational efficiency. In general, you’ll want a lower CCC, which means a shorter span of time that cash is tied up in the business cycle. This allows you to achieve more agile and efficient business operations, with faster decision-making and more financial leeway in case of sudden opportunities or emergencies. The best-case scenario for any business is a negative CCC, which means that your inventory is sold before you even have to pay for it. This is the reason companies spend so much effort offering items like smartphones, new tech gadgets, and condominium units in preselling campaigns. As an entrepreneur, you can monitor and optimise your business’s CCC to eliminate inefficiencies or bottlenecks in your business. Moreover, you can implement strategies recommended by your accountant or your finance team to improve productivity and reduce costs. This will not only enhance your bottom line but also strengthen your company's competitive position in the market. How Can Entrepreneurs Optimise their Cash Conversion Cycle (CCC)? Optimising the CCC requires a strategic approach and a focus on continuous improvement. Below are a few starting strategies to streamline your business’s CCC and enhance your financial performance: 1. Streamline Your Inventory Management Upon analysing your customer buying behaviour, supply chain, and other information, you can derive insight into your business’s demand patterns, implement just-in-time practices for it, and negotiate more favourable terms with suppliers to reduce your inventory holding costs and improve your inventory turnover. 2. Consolidate and Make Incentives Part of Your Accounts Receivable Management Offer your clients incentives for early payments and streamline your invoicing processes. You should also closely monitor any ARs that are ageing to accelerate your cash collection. 3. Negotiate Better Accounts Payable Terms Allow for improved financial flexibility by negotiating longer payment terms with your suppliers. Alternatively, you can take advantage of early payment discounts and work to optimise your payment scheduling to maximise your available cash. 4. Improve Supply Chain Efficiency Lastly, to improve your supply chain operation, it’s not enough to rely on sound data analytics. You also need to work on building strong relationships with your suppliers. In addition, you can implement lean principles for your business, such as eliminating waste and leveraging new automation solutions that can increase your efficiency and cut costs. Accounting experts like the people at Target Accounting can help you review your financial situation and make sure that you’re on the mark when it comes to optimising your CCC. Contact Target Accounting today to master this vital metric and ensure the profitability of your enterprise at any given time.

  • Accounting Compliance for Clubs and Societies: A Guide for Leaders

    Effectively managing the finances of your club or society involves more than just keeping the books balanced. It also requires a deep understanding of your fiscal responsibilities and your jurisdiction’s regulatory landscape. And even though your primary aim might not be to generate profit, financial management within your organisation is just as complex and important as it would be in a for-profit business. Organised finances can empower your group to operate at its best and achieve its goals, so it only makes sense to take advantage of the services of a professional accountant. When it comes to compliance, in particular, navigating the maze of tax laws, financial regulations, and reporting standards in a country like New Zealand can be a daunting task to tackle on your own. Qualified accountants can also act as your strategists and navigators, ensuring that your organisation can meet its legal obligations and also achieve optimal financial health. Their role is crucial in protecting your club or society against the risks of non-compliance, which can range from financial penalties to reputational damage. If you’re part of an organisation based in NZ and are in need of help with small business accounting, Dunedin and other major cities in the country are home to a host of competent professionals who would be more than happy to support you. We at Target Accounting provide expert accounting, business consultancy, taxation, and financial advisory services to clients all across New Zealand, including those who operate in the non-profit sector. In this article, we’ll highlight the various ways accountants can help your club or society stay compliant, manage its finances effectively, and thrive in the long term. 1. Financial Reporting Accurate and timely financial reports are an indispensable tool for maintaining financial transparency and accountability in your organisation. These documents are critical for meeting regulatory requirements, but beyond that, they also provide you and your stakeholders with a clear picture of your group’s financial health. Accountants play a vital role in the process of producing these reports. They employ rigorous standards to guarantee that every financial statement compiled in them accurately reflects your organisation's true fiscal position. This high standard of accuracy can help your organisation achieve compliance more easily and also build trust with your members, donors, and the regulatory bodies you’re accountable to. 2. Tax Compliance Getting through the complexities of tax obligations, from GST on transactions to payroll tax for your employees, can be a challenging aspect of running any organisation. Accountants supply you with an in-depth understanding of tax laws, including specific exemptions and concessions available to non-profit organisations. Their expertise ensures that your club or society both complies with these tax requirements and also maximises its financial resources through strategic tax planning. 3. Regulatory Compliance It can be challenging to keep your organisation in line with the myriad laws and regulations governing non-profit entities. Accountants can offer guidance on everything from fundraising activities to the proper utilisation of grants and donations. They can make sure that your organisation adheres to both the letter of the law and also to best practices in governance and financial management. This proactive approach to regulatory compliance is crucial for mitigating risk. In the process, it also stands to enhance your organisation’s credibility and integrity in the eyes of the public and regulatory authorities. 4. Audit and Assurance The thought of an audit might inspire dread, but it's an invaluable process for preserving your organisation's financial integrity and transparency. Accountants facilitate or conduct these audits by scrutinising every financial record and transaction to verify their accuracy to external auditors. In the process, your accountant can also reassure your members and donors that your organisation is managing its money responsibly. Plus, beyond compliance, this process uncovers opportunities for improving financial processes and controls, which should help you make informed decisions for the future. 5. Budgeting and Financial Planning A budget that aligns with your organisation's goals and objectives is a strategic tool for steering your club or society towards its vision. Accountants assist in crafting budgets that reflect realistic revenue forecasts and facilitate prudent expense management for your organisation. They’ll help you allocate every dollar effectively and adhere to any restrictions from donors or grantors. With their expertise, your budget will become a dynamic tool for guiding decision-making, which should in turn will empower you to respond flexibly to any financial challenges and opportunities for your club or society as they arise. 6. Financial Health Monitoring You’ll need to keep a pulse on your organisation's financial health in order to sustain its operations and mission. Your accountant should be able to analyse financial data in order to identify trends, pinpoint potential issues, and suggest timely corrective actions. Upon monitoring the state of your finances, a competent accountant will do everything they can to safeguard your organisation's future. An understanding of the financial indicators that signal your club's or society's well-being, in turn, equips you to make the most strategic decisions, secure in the knowledge that you have a solid financial foundation. 7. Advisory Services Accountants do more than keep your financial house in order. They can also serve as strategic advisors and offer insights that can shape your organisation's future. Whether it's navigating financial risks, planning for growth, or optimising resource allocation, their advice will be grounded in a deep understanding of your organisation's unique challenges and opportunities. Your accountant can guide you through significant financial decisions, from investments to expansions, and help you craft strategies that not only comply with any regulatory requirements your club or society must follow but also align with your long-term objectives. At the end of the day, it's clear that the role of accountants in your club or society extends far beyond mere number crunching. The professionals from Target Accounting can be a great help when it comes to enhancing financial transparency and guiding the strategic decisions of your organisation. Contact Target Accounting now for accounting and financial services that will help secure your club or society’s sustainability and success in the coming years.

  • 7 Ways Your Accountant Can Help You Improve Your Cash Flow Management

    There is an oft-repeated saying that, in business, amateurs are concerned with profits and losses, while veterans focus on cash flow. Though this viewpoint may be a bit simplistic, it does ring true for many businesses. In most cases, you would much rather have some cash coming in at all times rather than be on a never-ending cycle of feast and famine. As a rule, the longer the periods where a business has low or negative income, the bigger its risk, regardless of how much profit it turns. A lot of bad things can happen in the period between positive inflows, and being caught without an income can seriously hamper your operations. This is especially true if, like many New Zealand-based small businesses, your company only has modest savings. Cash flow is important for another key reason: credit. Stronger cash flows mean better credit ratings. This is no small thing, as your business’s creditworthiness also has a major impact on its survivability and its appeal to investors. Unfortunately, not every business owner has the skills or time needed to effectively manage their cash flow. In these cases, a professional accountant can be your trusted guide in keeping the money rolling in. Let’s see how Dunedin accountants like the people from Target Accounting can help you stay on top of your cash flow: 1. Budgeting and Forecasting Your accountant can help you make sense of your financial data, providing the perspectives needed to make an accurate forecast as well as a budget based on it. Just remember that not all accountants are necessarily equipped to do this sort of work, as proper financial forecasting requires serious upskilling. For the best results, you should engage with a company like Target Accounting, which specifically handles these activities for small businesses. 2. Creating Capital Expense Analyses Accountants are useful for helping you make informed decisions about big-ticket purchases. Let’s imagine that you’re running a café and you’re thinking of investing in a new espresso machine. Your accountant can look at the acquisition and financing numbers to help you determine if it’s a good move for your cash flow. With input from you and other critical team members, they can also recommend whether it’s best to switch to a new machine or hang on to the one that you already have, even if it’s less efficient on paper. 3. Managing Invoices The quicker those invoices get paid, the healthier your cash flow. This is not necessarily an issue for retail businesses, where real cash is immediately exchanged during transactions. However, any business that relies on offering credit will need to actively manage its receivables in order to keep its cash flow healthy. Your accountant can ensure that invoices are sent promptly and that any receivables are followed up on. Better yet, they can devise optimisations that minimise losses from invoicing errors. 4. Credit Management Dealing with overdue payments can feel like waiting for a wave when surfing—unpredictable and frustrating. Your accountant can help you establish clear credit policies and monitor customer payment behaviour. With their guidance, you can minimise late payments and keep your cash flow riding high. 5. Inventory Management “Inventory is cash” is a common saying in retail. While not literally true, it makes sense that unsold stock sitting in your warehouse represents a big problem for your cash flow. Your accountant can help you analyse your inventory turnover rates then help you ensure that you're not tying up too much cash in stock. Proper optimisation will mean that you'll have just enough to meet demand without getting bogged down. 6. Timing Expenses As your business grows, its list of billers is probably going to grow along with it. Even if you do have cash on hand, though, it’s not always a good idea to pay all your bills before they’re due since you might need the cash to cover other incoming expenses. An accountant should help you make sense of the best times to pay off your bills so that you’re never caught short of cash. 7. Tax Planning Smaller businesses are more likely to overpay compared to larger organisations, mostly because smaller businesses don’t always have accountants to process their taxes. An accountant should be able to find cost-efficient but completely legal avenues to navigate your business’s taxes, keeping it compliant while increasing its available cash at the same time. Accountants Can Optimise Cash Flow for Any Business General cash flow patterns do change depending on what your business is. For instance, while a restaurant in a busy urban area can expect relatively stable income all year round with boosts during holidays, a small farm will usually only have positive income during harvest time and negative outflows the rest of the year. Regardless, it’s always going to be in your best interest to secure as steady a cash flow as possible within your line of business. Whatever path you do take, having a qualified accountant by your side should help you make the most out of whatever cash comes into your business. Contact us at Target Accounting for accounting services and solutions that will improve your cash flow and, in turn, your prospects for profitability.

  • 7 Credentials You Should Look for in a Small Business Accountant

    Accountants are crucial to the success and sustainability of the small businesses that hold up New Zealand’s economy. Many small enterprises in NZ look to these professionals to manage their finances, attain compliance with tax laws, and provide strategic advice for growth. Considering the important role accountants play in ensuring smooth business operations, it’s a must for enterprise owners to evaluate the accounting companies they can work with before entrusting the latter with their financial information. It’s definitely in your own business’s best interest to weigh the skills and credentials of the small business accountant Queenstown company in your list of options, all so that you can have confidence that you’ll receive the expertise and support you truly need. To that end, here’s a list of the things you should specifically try to find when assessing your options: 1. Certifications and Memberships New Zealand maintains strict standards for accounting credentials to ensure professionalism and competence in the field. Accountants practising in the country may have the designation Chartered Accountant (CA), which is awarded by Chartered Accountants Australia and New Zealand (CA ANZ), or Certified Practising Accountant (CPA), which is from CPA Australia. These qualifications demonstrate that the accountants have undergone rigorous training and adhere to strict professional standards. In addition, accountants should also possess degrees in accounting or finance and engage in ongoing professional development to stay up-to-date on any changes in the country’s accounting standards, tax laws, and regulations. 2. Relevant Experience Aside from checking for membership to professional accounting bodies, it’s also important to look for accounting companies with a proven track record of working with local small businesses, preferably within your industry. Experience matters because it means the company understands the unique challenges and opportunities that small businesses like yours face. An accountant with experience in your industry will be better equipped to provide tailored advice and solutions to help your business succeed. To check for relevant experience, ask for case studies or references from clients in similar industries. In addition, inquire about the company’s longevity and stability in the market, as this can also be indicative of their experience and reputation. 3. Knowledge of NZ Tax Laws and Regulations NZ has complex tax laws and regulations that can be challenging for small businesses to navigate on their own. Therefore, it's essential to choose an accounting company with a thorough understanding of the local tax laws and regulations, plus the know-how to relay these to business clients in a straightforward manner. An accountant with expertise in tax matters can help you optimise your tax strategy, figure out how to minimise your liabilities and ensure compliance with any reporting requirements you need to follow. To assess the company's knowledge of tax laws, ask about their accountants’ experience with tax planning, compliance, and any specific cases that the team has handled related to taxation. Also, don’t hesitate to ask about the company’s approach to staying updated on changes in tax laws and how it communicates these changes to clients to ensure that all compliance needs are safely met. 4. Technological Proficiency Proficiency in using technology is a hard requirement for efficient, accurate, and value-adding accounting services in this age. To ensure that your business can benefit from the convenience and accuracy afforded by contemporary digital tools, look for accounting companies that are masters of the latest accounting software and technologies. A company that embraces technology can offer benefits such as real-time financial reporting, automated bookkeeping, and secure data storage for your financial data. You can assess a company’s capability in this matter by inquiring about the accounting software the team uses and whether cloud-based solutions are available for remote access and collaboration. 5. Communication Skills Sustaining a successful client-accountant relationship requires effective communication, especially on the latter’s part. When evaluating accounting companies, then consider each company’s communication style, track record for responsiveness, and ability to explain complex financial concepts in a clear and understandable manner. Choose a company that communicates proactively, promptly responds to your inquiries, and provides regular updates on your financial status. Remember: good communication is a cornerstone for trust and collaboration with your accountant, enabling you to work closely and in harmony with them to achieve your business goals. 6. Client References One of the most reliable ways to assess an accounting company’s credentials is by seeking client references. These offer firsthand accounts of the company's performance and can help you make an informed decision when choosing an accounting partner for your small business. Ask the company to provide references from current or past clients, ideally those with similar business profiles or needs as yours. Speaking directly with other clients can also provide you with valuable insights into the company’s expertise, reliability, and customer service. 7. Customised Services Small businesses have unique financial needs and challenges, so it's essential to choose an accounting company that offers customised services that align with your specific requirements for doing business. Find a company that takes the time to understand your business goals, challenges, and opportunities before proposing solutions to you. An accounting services provider that offers personalised services can help your enterprise get strategic advice and aid in proactive planning. To assess the company’s ability to offer customised services, inquire about its approach to client engagement and whether the team of accountants has experience working with businesses similar to yours. Also, consider whether the company offers additional services beyond traditional accounting, such as business advisory, financial planning, or succession planning. The effort you put into selecting an accounting company that matches your needs will eventually pay dividends in the form of improved financial management, compliance, and business growth opportunities. Knowing the track record and roster of talent at Target Accounting, we are the right people to choose for your small business’s financial matters.

  • The Role Accountants Play in Modernising Small Business Finances

    Everybody wants an accountant when their taxes are due. However, not everyone considers what accountants can do at other times of the year. Despite what you may think, accountants these days do more than just run audits and help with tax compliance. New Zealand-based accountants can also provide measured guidance that helps Kiwi small businesses reach their next level of growth. Indeed, it’s hard to modernise any business operation without the help of qualified small business accountants. Here’s a feature on why that’s the case and what difference the services of a competent accountant can make. What Do Accountants Bring to the Table? Aside from the usual bookkeeping, expense management, and tax audits, many accountants can also make tailored financial recommendations that match specific business goals. Some accounting firms even specialise in providing financial support for small businesses that are sensitive to the latter’s unique needs. Entrepreneurs who want to bring their operations into the financially complex world of e-commerce can also benefit from the advice that knowledgeable accounting firms offer. If you want to strengthen your business’ finances, be sure to go with small business accounting Dunedin entrepreneurs depend on. Below are some ways that qualified accountants can modernise and elevate your own operations: 1) Financial Data Management Once your business reaches a certain size, managing your finances will begin to take up a huge chunk of your time, potentially impacting your ability to grow your operations. Engaging with qualified small business accountants ensures the efficient and, more importantly, properly contextualised handling of your financial data, ensuring better decision-making. The resulting improvements in financial visibility and time savings can then, over time, be parlayed into sustainably growing your business. 2) Reporting and Analysis Great accountants will do more than just keep your records for you—they can offer actionable recommendations that will positively impact your operations. They’ll be able to draw insights from your financial data that may not necessarily be obvious to you, providing you with valuable perspectives not just in your finances, but in other business areas as well. Not all accountants are necessarily capable of providing this kind of service, as it requires specific industry knowledge and a mastery of data management tools, as well as some rare soft skills. For the best results, choose firms that specialise in small business accounting services Dunedin-based organisations trust. 3) Risk Mitigation In the case of small businesses, accountants are invaluable for navigating tax laws, labour laws, and other industry-specific regulations that could easily be overlooked. They can also set up robust internal systems that safeguard your operations from fraud, errors, and other financial irregularities. Together, these services help enhance your business’s credibility while also protecting it from excessive legal and regulatory expenses. However, not all accountants are necessarily cut out to do all of that for you. You need to hire accounting firms that have intimate knowledge of the challenges faced by small businesses within a given jurisdiction. This way, you can rest assured that the advice and solutions you’re getting are always relevant to the way you run your business. 4) Growth Planning If they have experience working with a variety of small businesses, accountants can develop tailored growth strategies that also coincide with your goals and values. Importantly, they will be capable of properly contextualising your business’s needs and help you avoid blindly adhering to so-called “best practices” that may not necessarily work for you. 5) Cost Optimisation Cost-cutting can do more harm than good if it compromises quality or hampers your long-term business goals. The right accountants go beyond simple expense analysis to provide recommendations that are meaningful beyond the short term. Typically, you’ll want to engage with accountants who have experience with your industry so that you can maximise the potential gains from your cost optimisation efforts. 6) Technology Recommendations Accountants can take you beyond ad hoc Excel spreadsheets and recommend better tools for your day-to-day financial data management. This can be a huge deal, given the confusing glut of accounting software solutions out there on the market. Once they’re familiar with your operations, your accountant should be able to recommend an easily integrated mix of solutions that are tailored to the way you do business. Again, specialised small business accounting firms are your best shot at getting the right-sized solutions for your unique operational needs. These firms will have had experience with a range of different solutions from their engagements with various small businesses, making them a credible source for tech recommendations. Choose the Right Accountants for Your Small Business All accountants can crunch numbers and do audits, but it takes specialisation to consistently deliver the services small businesses need to grow. Accountants who are familiar with your market and understand how small businesses work can be a serious asset, providing your business with the insights it needs to grow sustainably. With a team like that of Target Accounting at your side, your business will be primed to manoeuvre today’s complex financial landscapes with full confidence and to stay on the mark with regard to its long-term financial objectives. Contact the people at Target Accounting today to learn more about how we can help you modernise your small business finances.

  • Improving Your Business Profitability: 5 Tips from Accountants

    For modern companies, the quest for profitability is not just about increasing revenues. It's equally about managing expenses in the most strategic of ways and capitalising on emergent growth opportunities. However, this lofty goal proves elusive and fraught with difficulties for many businesses. Common challenges range from managing operational costs and navigating market fluctuations to staying competitive in a rapidly changing economy. In such a complex environment, entrepreneurs must pledge more than just hard work and dedication if they want to achieve sustained profitability. They must be committed to improving their financial management practices and acquiring a deep understanding of the economic forces at play. Business accountants are indispensable in the effort to overcome these challenges. Far from the stereotypical view of accountants as mere number-crunchers, their role in modern business management is both dynamic and multifaceted. Through duties like meticulous record-keeping, financial reporting, and in-depth financial analysis and advisement on compliance matters, accountants provide companies of all sizes the expertise necessary to navigate the financial side of doing business. Their skills will always prove critical in helping businesses identify areas for growth, potential risks in their field, and opportunities for cost savings. If your business currently requires the assistance of skilled accountants, Dunedin and other major cities in New Zealand are home to a number of seasoned professionals who can assist you. The best accountants understand the intricacies of finance and also use this knowledge to provide bespoke solutions to your business’s unique concerns. With that in mind, it’s likewise important to understand the specific things your accountant can do for your business’s profitability, all so that you can make the most of their services. Here are a few practical strategies that come from veteran accountants that are aimed at steering your business towards greater financial success: 1. Implement Cost-Control Measures The journey towards profitability often begins with a more thorough examination of existing expenditures, and this process requires the discerning eye of an accountant. Upon dissecting your financial statements and tracking expenses, your accountant can uncover hidden costs or areas of overspending. Their rigorous analysis is the first step towards identifying cost-saving opportunities that don't compromise the quality or efficiency of your business's operations. Beyond simple expense tracking, your accountant can also suggest strategies for optimising your spending. In particular, they can propose more cost-effective methods or alternatives for various business processes, like renegotiating vendor contracts or adopting more energy-efficient technologies. These recommendations should aim to go beyond simple cost-cutting and empower you to spend smarter in various aspects of your business operations. Ideally, you’ll want every dollar you spend to contribute to your business’s overall value and growth, and an adept accountant will know just how to help you get there. 2. Maximise Your Tax Efficiency Taxation, with its ever-evolving laws and regulations, is a particularly challenging area for entrepreneurs who aren’t natural wizards at maths. Here, the expertise of an accountant is crucial both for compliance and for optimising a company's tax position. Through strategic planning, your accountant ensures that your business benefits from all available tax deductions and credits, effectively reducing your tax burden. This aspect of financial management doesn’t just keep you in line with the law but also allows you to seize opportunities to be more efficient. Accountants, by profession, are required to stay up-to-date with the latest tax regulations and understand their implications. Their proaction should safeguard your business from unexpected tax liabilities and penalties. Moreover, you should be able to rely on your accountant to offer strategic insights on structuring transactions and investments in a tax-efficient manner, which will align all your tax-related activities with the broader financial objectives of the business. 3. Develop Accurate Budgets and Forecasts Accurate budgets and financial forecasts are essential for any business aiming to enhance its profitability. These tools help predict future income and expenses and, more broadly, form the basis of a roadmap towards sustainable growth. An accountant can bring greater precision and foresight to this process and thereby elevate the quality of your organisation’s financial planning. They can help your business set realistic financial goals and allocate your resources efficiently, which in turn ensures that every aspect of the business aligns with its financial targets. The role of accountants extends beyond creating these financial documents. They are also instrumental in interpreting the data and providing insights that guide decision-making. Through their analysis of trends, comparison of projected figures with actual results, and identification of variances, your accountant can help you arrive at a clear understanding of the financial impact of your decisions. This ongoing analysis will then allow you to make timely adjustments and strategic shifts where necessary. 4. Make Informed Financing and Investment Decisions The choices your business makes on financing and investment can significantly impact its future revenues. Your accountant can offer an objective perspective on these decisions based on what they learn from their financial analysis and from observing market trends. They’ll assist you in evaluating the risks and returns of different investment options, and they can also show you which choices most support the company's financial health and long-term objectives. This advisory role also encompasses financing strategies. Whether it's securing loans, exploring equity financing options, or managing existing debts, your accountant can provide insights on the most beneficial and sustainable financial paths. Their expertise ensures that your business both selects the right financing options and also structures them in ways that are advantageous in the long term. 5. Focus on Risk Management The world of modern business is highly unpredictable, which makes risk management a critical component of staying profitable. Your accountant can contribute significantly in this area by helping you identify potential financial risks and develop strategies to mitigate them. This involves a comprehensive analysis of financial reports, market trends, and economic indicators to anticipate and prepare for potential challenges. Beyond identifying risks, your accountant plays a crucial role in designing and implementing effective risk management policies. These policies might include diversifying your investments and establishing strong internal controls for your company’s financial processes. Your accountant should also be able to recommend appropriate insurance coverage for your business, depending on the specific risks you face. All these efforts should strengthen your ability to protect your organisation’s assets, preserve its financial stability, and position itself for continued growth.

  • 8 Ways Your Accountant Can Help You with Your Small Business Planning

    If it was always your dream to put up a small business in New Zealand, one of the first things you should be prepared for is the challenge of business planning. A proper business plan includes a list of the company’s objectives and its strategies for achieving them, especially in the face of constraints like an operating budget that’s initially on the leaner side. Your business plan isn’t a static document, and in the early stages of your entrepreneurial journey, it’s sure to require some tweaking. Luckily, it’s an option to enlist the help of professionals so that you can expertly and smoothly find your way around these tasks. Accountants, in particular, can be great partners to small business entrepreneurs for business planning tasks that concern financial management, taxation, and strategic decision-making. Upon your partnering up with a small business accountant Queenstown businesses like yours trust, you can expect them to help you in the following ways: 1. Conducting Financial Analysis and Reporting An accountant can serve as a dedicated resource person for conducting in-depth financial analysis and providing insightful reporting about the business. These professionals possess the expertise to thoroughly examine your financial statements, such as your income statements, balance sheets, and cash flow statements. Their careful examination of these documents will allow them to offer valuable insights into the financial health of your small business. Trust a competent accountant to present you with a clear picture of your company's financial standing—one that can empower you to make the most timely decisions and chart a strategic course for the future. 2. Developing Budgets and Forecasting Financials One of the key roles of an accountant is to assist you in developing realistic budgets and forecasting your business’s future financial performance. Your accountant can help you create budgets aligned with your business goals by drawing on historical data and industry trends. These budgets, in turn, can serve as essential road maps for financial planning, guiding your spending and revenue expectations. In addition, seasoned accountants can leverage their forecasting skills to project future financial outcomes and allow you to be proactive about planning and allocating your resources. This collaborative effort should ensure that your small business is well-prepared for a variety of financial scenarios. 3. Navigating Tax Planning and Compliance Engaging with the services of an accountant will be a highly strategic move for navigating the complex landscape of tax planning and compliance. NZ accountants are well-versed in the minutiae of changing tax regulations in the country, and good ones will help you ascertain that your small business remains compliant while minimising your tax liabilities. With their expertise on tax planning strategies, Kiwi accountants will be able to optimise your tax position so that you can confidently address tax-related challenges and take advantage of available deductions and credits. 4. Managing Cash Flow Effectively The guidance of a good accountant will also contribute a lot towards effectively managing your small business's cash flow. This is because, beyond monitoring your cash inflows and outflows, accountants can create cash flow forecasts for you. Forecasting your cash needs will enable you to identify potential cash crunches and, in anticipation, implement the right strategies to maintain liquidity. This proactive approach will ensure that your business has the necessary funds to cover operational expenses, seize opportunities for expansion, and tide through unforeseen financial challenges without being worse for the wear. 5. Providing Decision Support An accountant can also be a valuable ally when you’re making decisions for your small business. For one, they can offer you insights into strategic decision-making processes such as setting pricing strategies, making investment decisions, or implementing cost control measures. Your small business accountant can assist you when it comes to evaluating the financial implications of each option. With a better grasp of the nuances of your business's financial standing, you should be able to make business decisions that align with both your short-term objectives and long-term growth plans. 6. Advice on Business Structure and Registration Your accountant’s guidance is indispensable when you’re considering the structure and registration of your small business. They can help you assess your business goals, risk tolerance, and the wider tax implications of your registration. Considering the aforementioned factors, they can also recommend the most suitable business structure for your company, be it a sole proprietorship, LLC, or corporation. Moreover, accountants can guide you through the intricacies of the registration process and help you attain compliance with legal requirements. Their expert advice, then, not only lays the foundation for a sound legal structure, but also positions your business optimally for tax efficiency and liability considerations. 7. Establishing Internal Controls and Conduct Audits Accountants can also help you implement internal controls to prevent fraud and errors within your financial processes by setting up checks and balances and thus ensuring the transparency and accuracy of financial transactions. In addition, through regular audits, they’ll assist you in putting together an objective evaluation of your financial systems. This comprehensive scrutiny will enable you to identify areas for improvement for your business and ascertain that your financial processes align with industry best practices. 8. Handling Payroll Processing The services of an accountant during your business planning stages can also include the crucial responsibility of handling payroll processing. You can rely on a good NZ accountant to effectively streamline the intricate tasks related to payroll, such as calculating wages and deductions and ensuring accurate and timely payments to employees. Given how they must also stay updated on payroll tax regulations, your accountant can also help you avoid the risk of compliance issues. Altogether, this will allow you to focus on core business activities while making sure that your employees are compensated accurately and on schedule. As seen from the arguments above, the expertise of a trustworthy accountant will allow you to effectively steer your enterprise through the intricacies of budgeting, tax planning, and strategic decision-making. With trusted professionals like the people from Target Accounting by your side, you’ll be properly equipped to plan for the financial challenges that are part and parcel of owning a small business.

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