Business financial pressures

Budget 2024

New Zealand’s economy has been in the spotlight in the lead-up to Budget 2024, with many New Zealanders struggling with the cost of living pressures, high interest rates and inflation. A key focus of this year’s budget is alleviating some of these pressures and providing support to Aotearoa’s “squeezed middle”.

For New Zealand businesses, the Government’s long-term vision for a healthier New Zealand economy will be welcome news – however, Budget 2024 may not deliver the immediate respite many have been hoping for. We know from our April BDO Business Wellbeing Index that business leaders are feeling less confident about their business financial performance than ever, with economic factors, cash flow, and political factors driving negative sentiment. Business leaders are looking for tax relief and a reduction of red tape, and while Budget 2024 does offer some positives for business leaders, the road ahead remains long.

“Small and medium-sized enterprises make up 97% of New Zealand’s businesses, making them an integral part of the country’s economy. Like consumers, businesses are really feeling the impact of the current high interest rates, high inflation, and the cost of living crunch. 

The announcements in Budget 2024 make a start in helping business leaders address some of their key challenges. However, continued central Government focus on economic policy and measures to support the business sector will be necessary. Any uplift will likely take time and businesses will need to prepare to ride out these economic headwinds before things get better. While conditions remain challenging, many of these problem areas are not new, and there are people and practical steps to help business leaders manage these effectively."

Kimberley Symon, BDO Advisory Partner

Quick tips

  • Consider your cash flow. In the short term, that includes determining whether you can pay your bills and how much money is in your business bank account. In the long term, think about areas where you can predict fluctuations in cash flow. A close relationship with your bank can be key in getting through a cash flow crunch. 
  • Keep a close eye on debtors to collect cash within reasonable timeframes. Debtors may delay payments to manage their cost pressures. Look at your terms of trade and, if feasible, consider providing incentives for prompt payment.
  • Think about the “what-ifs.” The business landscape can change rapidly, and it’s important that your business is able to adapt to meet the market. When forecasting, ensure you understand your potential financial position under a number of scenarios, and plan what you would do to mitigate risk or maximise opportunities in each.
  • Think strategically. While understanding the current economic climate is the first step, businesses must form or refresh their strategic plan to ensure they are moving in the right direction. Consider what success looks like in the long-term and how you’ll get there - ensure that decisions are strategic, rather than reactive - and that will move you in the right direction toward your goal.
  • Consider your governance model. It's important that business have people with the right skill sets in place to form strategy, make decisions, and provide advice. Asking independent directors to join your board or alternatively, forming an advisory board are excellent methods to add knowledge and skills to your business governance framework. 
  • Review your pricing and margins to manage inflation. Increased business costs can squeeze your margins, so take the time to regularly review and update your pricing as necessary with a view to your competitive landscape. This is especially important at the start of any significant project. Consider adding clauses to your contracts to help you adjust prices according to inflation
  • Look at your financials holistically. You should be as familiar with your overall financial picture as you are with your products and services, market, and industry. Review every metric, from net profit and gross margin to expenses, cash flow, and sales. Look at how these combine to build an accurate picture of how your business is performing.

For practical business tips see our BDO Business Wellbeing Index here.

More information and help available

You can read more details on Budget 2024 at the Government Budget website here

To talk about how any of today’s Budget announcements will affect your business and for help with cash flow, forecasting, scenario planning, or to talk about your business, reach out to your local BDO office today.  

Key contact

Return to our Budget 2024 overview page
to learn more key insights for businesses.