Cash flow gaps are part of running a business in New Zealand: a customer pays late, a big order needs materials upfront, winter slows the café, a machine breaks, provisional tax lands. The Reserve Bank has noted that smaller firms’ deposit buffers have shrunk relative to the economy over the past three years, which means more businesses are feeling these gaps sooner. Here’s every realistic option, from fastest and cheapest to slowest.
First, what kind of gap is it?
- One-off: a single event with a known end (a late payment, a repair).
- Seasonal: predictable, recurring troughs.
- Growth: sales rising faster than working capital.
- Structural: costs consistently exceed income.
The first three are fundable. The fourth needs a business fix, not a loan. Borrowing to cover a structural gap only delays the reckoning; talk to your accountant first.
The options, ranked
Tier 1: free and fast (do these first)
- Collect what you’re owed. Call every overdue debtor today. Offer easy payment methods. Invoice completed work immediately.
- Ask suppliers for time. A short extension or split payment from a supplier who knows you is often easy to get.
- Talk to Inland Revenue early. If a tax payment will be late, IRD prefers to hear before it’s due; an instalment arrangement may be possible.
- Delay non-essential spending. Pause discretionary purchases for a few weeks.
- Sell slow stock. Clearing aged inventory turns dead money into cash.
Tier 2: existing facilities
- Draw on an existing overdraft or line of credit. That’s what it’s for.
- Business credit card, for small amounts you can clear quickly. See alternatives to business credit cards for why this shouldn’t become a habit.
Tier 3: new short-term funding
- Non-bank line of credit. For seasonal or recurring gaps; sized on turnover. See business line of credit.
- Short-term unsecured loan. For a one-off gap, businesses trading 6+ months; decisions sometimes same-day. See unsecured alternative lending.
- Invoice finance. For B2B businesses waiting on customers. See invoice finance explained.
- Property-secured loan. For larger gaps or when other options are closed; $20,000 to $1m; no financials or tax returns for the initial assessment. See second-mortgage business funding.
Tier 4: slower or bigger moves
- Bank loan or overdraft increase. Cheapest if approved, but usually weeks.
- Family support, done properly with a written agreement.
- Selling a surplus asset. See alternatives to selling assets.
- Equity. Months, and only for businesses investors want.
Matching the gap to the tool
| Gap type | Best-fit tools |
|---|---|
| One-off, small | Collect debtors, supplier terms, credit card cleared quickly |
| One-off, larger | Short-term unsecured loan or property-secured loan |
| Seasonal | Line of credit; plan it before the season |
| Growth | Invoice finance or line of credit |
| Tax-related | IRD arrangement or a loan that pays IRD out |
| Structural | Fix pricing and costs first; see your accountant |
A 13-week cash flow forecast: your best defence
The single most useful tool for gaps is a simple 13-week forecast: expected cash in and out, week by week. It shows gaps coming weeks ahead, when you have more options and more time. Inland Revenue and lenders both respect a business that can produce one. Your accounting software or accountant can help set it up.
Warning signs you’re past “a gap”
- Using one short-term product to pay another.
- GST and PAYE routinely late.
- Suppliers moving you to cash-on-delivery.
- The overdraft never clears.
If you see these, get advice from your accountant before taking on new debt.
Seasonal gaps: plan them before the season
Many New Zealand businesses have gaps you can see coming a year away: a Queenstown operator’s shoulder season, a Hawke’s Bay orchard before picking, a retailer stocking up in October for Christmas, a builder’s January shutdown followed by February wages. For predictable gaps:
- Set up the facility while trading is strong. Lenders assess on recent bank statements, so apply when those statements look their best, not in the trough.
- Size it to the worst month, not the average. Your 13-week forecast will show the deepest point.
- Agree supplier terms in advance. Suppliers are more flexible when asked early than when an invoice is already overdue.
- Ring-fence tax. Seasonal businesses often hit GST and provisional tax just after peak spending. Put tax money aside as it’s collected.
Where we fit
We arrange lines of credit and unsecured loans for businesses usually trading 6+ months, and property-secured loans from $20,000 to $1m. Enquiring takes about 60 seconds and doesn’t affect your credit score.