Cashflow, cashflow, cashflow,

You hear it so much that sometimes the repetition can dilute the message, but for any business, cash is king. This is especially important for small businesses.

Much of the focus is rightly on the issues caused by late payment of invoices and this is indeed a huge problem. Xero’s small business insights highlight that on average, small businesses are paid 7 days late on their invoices. This means small businesses are collectively owed around $7.4bn on any given day in NZ. However, cashflow management is not only a one-way equation focused on the speed in which cash comes in the door but also the careful management of how you are spending your own cash on a month by month basis.

The ability to spread the cost of a purchase over time is a key way to assist with cashflow. New Zealand and Australia has seen significant growth in consumers using instalment payments as a means to pay for their purchases.

Much of the tail winds driving the growth in instalment payments, often called “buy now, pay later, is a result of consumers moving away from traditional forms of credit, in particular credit cards, but the cashflow benefits of paying by instalments is also major reason for their popularity.