Inflation and interest rates are high, the economy is slow, and small businesses continue to face a number of challenges this year. Cash flow struggles are adding up for Kiwi businesses, and managing cash flow has become more important than ever.

Research from small business platform Xero highlights the cash flow challenges faced by many business owners today.

About 46% of small business owners and 60% of sole traders aren’t paying themselves a wage in order to keep their business running, and more than half have increased their prices to cover cash flow challenges.

In addition, 48% of small businesses have taken steps to review and remove costs in their business as they deal with rising overheads and slowing revenue growth.

The economic environment also had a real impact at home as small business owners struggle with the emotional fallout, with 15% saying work issues had caused them personal stress most of or all of the time.

Share your cash flow story and win $5,000

In these difficult times, Xero wants to support small businesses struggling with cash flow challenges. The accounting software provider wants to learn more about the impacts of these challenges and help to provide solutions.

Xero has invited small businesses to share their cash flow stories and enter a draw to win a $5,000 prize.

Entrants are asked to provide details about their cash flow challenges and steps they would like to take to improve their situation, with winners awarded funds to help improve their cash flow situation.

Steps to improve cash flow – Know your numbers

There are a number of ways for small businesses to manage their cash flow and persist through the current economic environment.

Aside from reviewing and removing costs, raising prices for customers, or organising payments with direct debits, business owners can embrace digital tools to get paid faster and improve cash flow.

According to Xero’s research, many small business owners use accounting software (45%) to help keep track of their revenue and outgoings.

Digital tools can help business owners predict periods when cash flow might be tight, enabling them to prepare. Software services like Xero let businesses make short-term cash flow projections using the power of data analytics.

The enhanced visibility gives business owners a better picture of their financial situation.

Xero Country Manager – NZ Bridget Snelling says digital tools can help company owners “anticipate periods when cash flow often dips into the red, and adjust how they operate to improve their monthly cash flow position accordingly”.

Digital tools can help small businesses get paid faster so this money flows into the small business community. Xero customers can send invoices with easy ‘pay now’ options, enabling clients to pay quickly online.

Digital accounting tools also allow businesses to invoice clients on their mobile devices. Mobile invoicing speeds up the customer payment process and can help to ease cash flow concerns.

Technology can make a real difference to cash-flow issues, Snelling says.

“The right digital tools can directly help businesses to get paid faster,” she says. “This starts with technology allowing for immediate invoicing as soon as a job has been completed, as well as organising automatic follow-ups when payments are missed.

“Other features like ‘pay now’ on invoices provide organisations with more ways to pay instantly,” she adds.

Complete the entry form to be in to win one of two $5,000 cash prizes – allowing you to improve your small business cash flow by investing in digitalisation.