Using cashflow for cost control

Whether your business is in growth mode or recovery mode, cashflow is a vital part of staying in business.

Profit, your bottom line, income streams and outgoing expenses all have importance when we are back to “normal” (however “normal” is going to look) so now more than ever cashflow and keeping everything running should be the priority. Regular cashflow forecasts will help you keep that in focus. Here’s why:

Cost control

If you can't reach your targets for income, reining in your costs may give you a little extra head room to manage cashflow while you plan your next move.

Visibility on outgoings

Cost control can be a challenge when it’s hard to pinpoint hidden costs or where established ways of doing things cost more money than they should. You may also have been coping with unexpected expenses, as you’ve adapted your business for unplanned circumstances.

Improving business practice - It's more than just keeping an eye on outgoings (though that's important). It's about looking at each aspect of your business and business systems (or the gaps where there should be business systems) to see if poor practice is driving costs up unnecessarily.

It can be useful to break it down

You can look at cost centres such as office supplies or freight. Or you can look at what those costs do for your business. It can help to analyse costs in terms of cost of sale and overheads.

Cost of sale and overheads

Cost of sale (also known as Cost of Goods Sold or COGS) is how much it costs you to make a sale. In a business which sells products, COGS is based on the price paid for the product, plus any costs necessary to put the merchandise into inventory and make it ready for sale, including shipping and handling. You can even break it down to calculate the cost of sale of individual units.

Overheads are general business expenses

They can’t be tracked directly to sales. Overheads are what it costs you to open your doors (whether online or actual) every morning.

What’s your plan?

Talk to the team - Analyse your costs and involve your team, including frontline sales staff.
Negotiate with suppliers - Can you work with your providers to ask for discounts or more favourable payment terms on either cost of sale or overhead expenses?
Reduce unnecessary expenses - Now might be the time to trim every expense that’s not related to your core product or service.
Advertising - It might be false economy to cut back on advertising, as customers are online looking for bargains and price-checking alternatives. Targeted campaigns might work better.
Prioritise - Can you pinpoint the products most likely to bring the fastest or best return and hold back on products that are slower to sell?
Promote or discount - If you have old or slow-moving stock, can you discount it and convert old stock to cash? If you can attract customers now, you may be able to use it to spotlight your other products.

Every dollar you can pull back from your costs can go straight into cashflow. Talk to us if you'd like to review your costs and your systems to keep costs under control. Whether your sales are boom or bust, you want to make sure that your costs aren't holding you back.

< Older Post

Newer Post >

How to prepare for the end of financial year

20 February 2025

The end of the financial year is fast approaching, so if you’re balance date/end of financial year is 31 March, there are a few things you need to do to help us prepare your financials. Take a stocktake If your business sells products or has stock, you’ll need to do a stocktake on 31 March. If you’re a business that sells products, then you need to take a stocktake of your physical inventory. If you’re a farmer, then you need to take a physical livestock tally. Send in your EOY papers Compile a folder (digital or hard copy) with a copy of the following documents: Bank statement that shows the balance on 31 March 2025 for all your bank accounts and loans. Insurance invoices. ACC invoices. Loan statements for the year (if applicable). Any new loans or refinancing documents. Invoices for assets purchased and sold. GST workings and reports. Submit the online questionnaire You’ll also need to fill out and submit the online questionnaire. You should receive an email from us in April/May, with a link to fill out and submit the questionnaire. If you haven’t received an email with the link by the end of May, let us know.

Supporting the Heart of Dargaville and Whangārei Communities

17 February 2025

At Gunson McLean we are more than just a business offering financial expertise we also support our communities in Dargaville and Whangārei. By partnering with various local organisations, we help sustain and strengthen sports, recreation, and community initiatives in the region. Empowering Local Sports Clubs We understand the role sports play in bringing people together, promoting teamwork, and supporting youth development. We are proud to sponsor the Old Boys Marist Rugby & Sports Club, Hikurangi Rugby Football Club Inc, Maungakaramea Hockey Club, Maungakaramea Bowling Club, Mid Western Rugby Squash Club, Kamo Rugby & Squash Club, New Zealand Vikings Rugby Football Club Inc., and the Cobham Cricket Club. Promoting Outdoor Education We also believe that outdoor education is essential for youth development and are proud to work with the charitable trust, Pātaua Outdoor Education & Recreation Trust (POERT). We have been closely involved in the Trust’s activities for the past 8 years – handlings its financial matters – and Craig Gunson is the current Treasurer. Backing Community Halls & Facilities We’re proud to support the Whareora Hall Society and Whareora Cemetery Board as well as local cycling and motorcycling groups Marsden Wheelers Cycling Club Inc., and the Whangārei Motorcycle Club. We are passionate about the causes we support, and the opportunities and growth this enables in our Dargaville and Whangārei communities.

Optimise your business by taking care of your employees

7 February 2025

Most people agree that optimising your business is a good idea and spend hours looking at optimising the supply chain, storage, overheads etc. However, they forget that people are one of the most critical elements in your business. By providing a caring, supportive workplace for employees you also drive the success of your business. Studies show happy workers are productive workers and, as an employer, it’s a no-brainer to provide a workplace where employees feel valued, and where they can flourish. Here are five key ways to build employee relationships, nurture your team, and create a great workplace for your employees: 1. Invest in your employees This doesn’t mean ‘casual Friday’s’ or a pizza night once a month. This is about offering your employees access to training programmes, workshops, conferences, and mentorship programmes. It’s about the professional growth of your employee and how you can enhance their skills and make them feel truly valued as team members. 2. Create a positive work environment Creating a positive work environment is about cultivating a workplace culture that feels positive and supportive of your employees. Be open and transparent with your employees, listen to their feedback and have a strong focus on employee wellbeing. This could include offering flexible working arrangements, benefits such as health insurance, and other perks. 3. Recognise and reward your employees When an employee goes above and beyond, make sure your recognise and reward them. This could by through a performance bonus, employee-of-the-month programmes or even extra time off in lieu. Feeling valued comes partially from feeling rewarded and can be an amazing motivator. 4. Give employees autonomy One of the key ways employees feel trust, is by being given autonomy. Being trusted to come up with their own solutions, processes, and ideas is key to making people feel as if they ‘own’ their role. This helps employees feel fully involved and also brings new ideas, solutions, processes, and efficiencies to the table. 5. Put wellbeing at the heart of your culture Life is stressful. And work-life can be stressful. A well though out wellbeing programme can help your employees manage stress and, in turn, benefits your business. A wellbeing programme is different for each business but some ideas could be checking in with team members, creating a ‘ask for help’ culture, flexible working arrangements including work-from-home days, and offering mental health support. Making sure you’re a caring and supportive employer is vital to your business strategy. With a team who feel valued, nurtured, and encouraged, you’ll all be happier and more productive.