Your Business is Earning More: So Why Is the Bank Balance Still Flat?

by Sean Foster | September 24, 2025  | Business Coaching

Introduction

You’ve hit record revenue, yet your bank balance doesn’t reflect it. You're far from alone. Even profitable businesses often wrestle with cash flow. Let's unpack why those dollars aren’t landing where they should be, and how to get them back into view (and your pocket).

1. Profit vs Cash Flow: Why NZ SMEs Get Caught Out

Profit is what’s left after expenses, but cash is what sits in the bank. You can be profitable on paper, yet cash-poor. This is especially true if you're regularly drawing money for personal expenses, tax bills, or reinvesting without tracking properly.

Takeaway: You are probably already aware that cashflow and profitability are two very different measures, and that in NZ, company liquidations have doubled between 2021 and 2024. Although hard stats are not available, it is well known that cash flow issues are the leading cause of business failure, yet most businesses, if they have any financial focus, tend to focus more on profitability over cashflow. Why?

2. Top Cash Flow Problems for NZ Small Businesses

Most NZ businesses face cash flow challenges. This is especially true if they are relatively young businesses or growing. Just like it is difficult to predict the weather, so too is it difficult to predict or to exactly forecast how a business will perform in the next 1 to 6 months.

Poor cash flow doesn’t just hit the business, it hits owners personally. According to Xero's 2023 Small Business Insights, 46% of small business owners in NZ say they couldn’t pay themselves normally, due to cash constraints.

Takeaway: Cashflow is fickle and you should expect to run into challenges regarding your business cashflow - and with that acknowledgement: your focus should be on what you can do to best manage the cashflow in your business.

3. Why Revenue Doesn’t Always Mean Available Cash

Where is cash tied up in your business? There are many places, here are the top three for many businesses.

• Delays in customer payments: Your revenue may look healthy, but invoice payment lag creates a cash flow mismatch. Many businesses operate with long payment terms or slow-paying clients, meaning revenue is booked but not received. This delay creates gaps that can disrupt your ability to cover regular expenses like wages or rent.
• Over-investment in stock or expansion: Investing in growth is positive, but when too much cash is tied up in stock or infrastructure, it can leave your business strapped for operational funds. Without strong cash flow planning, these investments can turn into liabilities. Do you know what your sustainable growth rate is?
• WIP: This is mostly unbilled or work-in-progress. Do you know what this number (dollar or percentage) is in your business? WIP is a major focus in any Lean or Kaizen approach and for good reason.

To go deeper into how you can understand and manage your business cash flow, check out our guide: SMEs Simple Guide to Cash Flow 101.

4. 5 Cash Flow Management Tips for NZ SMEs

1. Monitor and chase overdue invoices aggressively
   Use tools like Xero to automate reminders, set clear payment terms and stay on top of receivables. And ensure that both your customers and your staff, have a clear understanding of payment terms.
2. Forecast cash, not just profit
   Build a rolling forecast showing cash in and out. Model scenarios: best, worst, and most likely to prepare for surprises. Surprises are normal, so guess that means: ‘Prepare for the normal 🤔.’
3. Manage stock and supplier terms strategically
   Excess inventory ties up cash. Use smart inventory software, negotiate longer supplier terms, or shift excess stock through targeted promotions.
4. Diversify how and when you get paid
   Offering incentives for early payments or structured payment plans helps keep money flowing in.
5. Watch patterns and stay adaptable
   Regular review of debtor days, working capital, and forecast versus actual figures can give early warning of pressure before it becomes a crisis.

One of the biggest challenges for business owners is learning from the mistakes they didn’t see coming. If you’ve ever wondered what the most common cash flow errors look like, and how to steer clear of them, our article: 6 Major Cash Flow Fails And How To Avoid It can help. It breaks down the most frequent cash mistakes business owners make, and offers practical ways to avoid them before they damage your bottom line.

5. Why Financial Clarity Often Points to Business Coaching

Getting your cash flow under control isn’t just about numbers. It’s about clarity. A coach can help bring fresh eyes to these patterns, help you build a repeatable forecasting habit, and clarify which investments genuinely drive value (and which leave your business strapped).

If you’re wondering whether a business coach can play a direct role in resolving cash flow issues, we’ve unpacked that too. Our article Can a Business Coach Help Me Fix the Cash Flow Problems of My Business? explores real ways coaching supports financial turnaround and stability.

Real Business Wins from Coaching Support

Many business owners are surprised at just how much clarity, confidence, and measurable improvement they gain once they start working with a coach. According to research by PwC and the International Coach Federation (ICF), 86% of companies that invested in coaching reported a positive ROI, and 70% saw improved work performance, communication, and relationships, as outlined in the ICF Global Coaching Study. That’s not theory—that’s real-world business impact.

When applied to cash flow challenges, coaching helps untangle financial confusion, identify the actual problem behind recurring shortfalls, and build plans with accountability that stick.

Conclusion & Invitation

Profit is important, but control over your cash is what keeps the lights on. If your bank balance feels out of sync with your success, let’s take a clear, actionable look together and work out where your real value is hiding.

Ready to get started? Book a call with Sean and let’s explore how to bring more clarity and confidence to your business finances.

Frequently Asked Questions

What’s the difference between profit and cash flow?
Profit is an accounting measure, what remains after expenses. Your tax liabilities are largely calculated off your profitability numbers. Cash flow is the actual money in your bank. In many ways, cash flow is the more important metric.

How common are cash flow problems for NZ small businesses?
Very. About 95% of NZ SMEs experienced at least one month with negative cash flow; 46% couldn’t pay themselves at some point.

Why does a business with strong revenue still struggle with cash?
Often due to slow payments, excessive stock or reinvestment, and failing to forecast future obligations clearly.

How can I improve cash flow without losing immediate business operations?
Prioritise chasing overdue payments, forecast cash flows, optimise inventory, offer early payment incentives, and keep reviewing your metrics.

Can coaching help solve cash flow issues?
Absolutely. Coaching brings perspective, accountability, and strategy to untangle cash dynamics and build consistent financial clarity.