Don’t Let Cashflow Be the Reason IRD Calls: How to Stay Ahead of Tax Arrears and Keep Your Business Safe

The Hidden Cashflow Crisis Affecting NZ Businesses

Across New Zealand, more and more small and medium businesses are feeling the pressure from the Inland Revenue Department (IRD). It’s becoming increasingly common to hear of companies being placed into receivership or liquidation, not because they aren’t viable, but because of poor cashflow management and unpaid tax obligations.

At Informed Decisions, we see it all too often. Businesses with great products, strong teams, and solid customer demand, yet struggling to pay PAYE, GST, or provisional tax on time. The problem isn’t always revenue, it’s the timing of cash coming in and going out.

Why Cashflow, Not Profit, Is the Real Threat

A healthy profit and loss statement can hide an unhealthy cashflow. Many business owners assume that if they’re making money on paper, they’ll have cash in the bank. But delayed customer payments, growing supplier costs, unsustainable drawings, or large tax bills can quickly erode liquidity.

This mismatch between revenue and cash availability is where the trouble begins. When IRD debt builds up, it doesn’t take long for penalties and interest to spiral. Once you’re on their radar, the road back to stability becomes much harder.

The IRD Crackdown: What’s Happening Right Now

In recent months, IRD has become far more proactive in pursuing overdue tax. Where they might have once been lenient, they’re now moving faster to enforce payment arrangements and, in many cases, initiating liquidation or receivership proceedings against non-compliant businesses.

This change in approach is leaving many owners blindsided. But the good news is that most of these situations are entirely avoidable with the right visibility and planning.

How to Regain Control of Your Cashflow

Effective cashflow management is not just about processing numbers; it’s about understanding the rhythm of your business and planning for what’s ahead.

Here are four areas we focus on when working with clients:

1. Manage Debtors: Don’t Be the Bank for Your Customers

Late payments are one of the biggest killers of small business cashflow. Tighten credit terms, set automated reminders, and don’t be afraid to follow up early. Consider offering small discounts for early payment or using tools that link your accounting system with debtor tracking.

2. Control Creditors: Build Strong, Transparent Relationships

On the other side, work with your suppliers. Negotiate better payment terms or set up scheduled payments that align with your revenue cycle. The goal is to maintain positive relationships while giving yourself breathing space.

3. Review Stock and Work in Progress

Excess inventory and unfinished jobs tie up valuable cash. Regularly review what’s sitting on your shelves or in production and assess whether it’s earning its keep. For manufacturing and construction businesses especially, visibility over inventory and work in progress can unlock huge gains.

4. Manage Drawings

In many small businesses, owners continue to take regular drawings even when cashflow is tightening, simply because it is what they have always done. But these personal withdrawals, although important for personal income, can quietly drain capital from the business. A proactive approach to reviewing drawings alongside cashflow forecasts allows business owners to set clear limits to ensure business stability.

5. Forecast, Don’t Just Report

A cashflow forecast turns data into decisions. It shows when shortfalls might happen and gives you time to act. Whether it’s planning for tax payments, reinvesting profits, or managing debt, forecasting transforms your financial management from reactive to proactive.

Where We Add Value

At Informed Decisions, we go beyond the numbers. We partner with business owners to:

• Build tailored cashflow forecasts that reflect real-world business cycles

• Review financial health and working capital positions

• Offer strategic insights from decades of banking and accounting experience

• Provide the support and accountability you need to stay on track without needing a full-time CFO

Our aim is simple: to help you take the mystery out of managing cashflow so you can focus on running your business with confidence.

Finally

If IRD debt or cashflow strain is starting to feel overwhelming, you’re not alone, but you do need to act early. The earlier you have a plan, the more options you have.

We believe every business owner deserves clarity, control, and confidence in their numbers. That starts with understanding your cashflow before the IRD comes calling.