Warrick Gibbs of Westpac NZ shares key insights from the bank’s cash flow guide.

Cash flow is often described as the lifeblood of a business, but in New Zealand’s small-business landscape, it’s more like the weather: everyone talks about it, everyone is affected by it, yet too many owners still treat it as something outside their control.

Westpac NZ’s guide, Keep the Cash Flowing, cuts through that sense of fatalism with a simple message – cash flow isn’t a mystery; it’s a discipline. And mastering it is one of the most powerful strategic advantages a business can build.

“Cash flow is the first signal of a business’s health – long before profit and loss tells the story, cash flow whispers it,” says Warrick Gibbs, Corporate Area Manager for Westpac NZ. It’s a sentiment that echoes throughout Westpac’s guide: liquidity is not just an accounting concept; it’s a real-world indicator of resilience, agility and survival.

Negative cashflow – an all too common issue

According to Xero Small Business Insights, around half of New Zealand small businesses (approximately 50–55%) experienced at least one month of negative cashflow in 2024. That’s not a fringe issue, and it’s a reminder that profitability alone doesn’t keep the lights on.

“I’ve seen profitable businesses fail because they ran out of cash, and unprofitable ones survive because they managed their cash flow with discipline,” says Warrick.

The guide breaks cash flow into three states – positive, neutral and negative – but the real insight lies in understanding why businesses slip into the red. The causes are familiar but often underestimated:

• slow inventory turnover
• rapid growth that outpaces liquidity
• unbilled work in progress
• seasonal revenue dips
• slow-paying customers
• unexpected costs
• tax obligations that creep up quietly

Individually, these issues are manageable. Together, they can choke a business.

Hidden traps that hinder cash flow

The guide outlines traps that catch even experienced operators. Take growth, for example. Many owners assume growth is always good. But Warrick notes: “Growth is the most dangerous phase for cash flow. You’re hiring, buying stock expanding – all before the revenue catches up. If you don’t plan for that gap, it will swallow you.”

Seasonality is another silent killer. January and February revenue is 20% lower on average for small businesses. Yet many owners fail to forecast for it, treating the downturn as a surprise rather than a pattern.

And then there’s the perennial issue of late payments. Xero estimates that New Zealand businesses are collectively owed around $26 billion in overdue invoices. Given that 97% of New Zealand firms are small businesses, much of this burden – around $25 billion – falls directly on SMEs. That’s an economic drag.

Practical fixes – and why they matter

Seven practical strategies are offered for improving cash flow. Warrick explains they’re not revolutionary, but they’re powerful when applied consistently:

• tighten payment terms
• offer more ways for customers to pay you
• strengthen invoicing processes
• ring-fence tax money
• review your pricing
• negotiate with suppliers
• use cash flow statements and forecasts

“Cash flow management isn’t about clever tricks. It’s about doing the basics relentlessly – invoicing on time, following up, forecasting, and knowing your numbers.”

Forecasting: the most underrated business skill

Forecasting is particularly important. It’s a strategic tool that gives owners the ability to anticipate crunch points, plan for seasonal dips, and make informed decisions about hiring, investment and debt. “A good forecast doesn’t predict the future – it prepares you for it,” Warrick says. “It gives you time to act instead of react.”

Westpac encourages using accounting software or working with an accountant to build accurate forecasts. But the real message is that forecasting is essential.

Cash flow as strategy, not admin 

The guide’s underlying philosophy is cash flow is not a bookkeeping task; it’s a strategic capability. Businesses that master cash flow:

• make better decisions
• grow sustainably
• weather downturns
• negotiate from a position of strength
• reduce stress and uncertainty

“Cash flow doesn’t reward optimism. It rewards discipline,” says Warrick. “The businesses that survive – and thrive – are the ones that treat cash flow as seriously as their customers, their staff, and their strategy.”

More information: Cash-Flow-Guide-Westpac-NZ.pdf