Late payments from clients don’t have to impact cashflow

Late payments from clients don’t have to impact cashflow

Late payments from clients don’t have to impact cashflow 765 450 TMNZ Blog
Image: Specialist Glass Cleaning and Protection

Peter and Heather Wavish, owners of Specialist Glass Cleaning and Protection

Late payments from clients can affect cashflow and make it difficult to satisfy other obligations.

It’s something Heather and Peter Wavish, owners of Specialist Glass Cleaning and Protection, know well.

Hence they turn to Tax Management NZ (TMNZ) to mitigate the ramifications this has on their business when it comes to paying provisional tax. More on that later.

The husband-and-wife duo, who earn a living restoring and protecting glass and tiles, have experienced first-hand the difficulties small business owners face when clients make late payments. They could probably write a book on the matter if pressed.

It’s frustrating because they’ve completed the work. Stressful because they’re unsure when exactly they will see the money for said work. Makes it difficult to budget, too.

They’re not alone. The issue smaller suppliers face in receiving payments has been the topic du jour recently, commanding its share of media coverage.

“There seems to be this general belief that everybody who is self-employed is making a lot of money. That’s not the case. When you are self-employed, you still have to fight for every dollar and you’ve still got your expenses for the business,” says Heather.

“Running a business, you are always robbing Peter to pay Paul. At any one time, you’ve always got [money] out there and you just pray that everybody is going to pay you.”

That’s not to say Specialist Glass Cleaning and Protection doesn’t shy away from chasing late payments. Far from it.

But, despite repeated follow-ups, sometimes the do-re-mi still takes a while to find its way into their bank account. This can lead to a cashflow squeeze. This leads to headaches around how they are going to pay for other expenses.

Into this category falls tax payments. Inland Revenue (IRD) has a rigid timetable. If you don’t pay on those dates, you are met with usurious interest and late payment penalties.

And, based on Heather’s experience of missing a GST payment, their staff are not always so forgiving if you cannot cough up with the dough on time.

“They’re not in business,” she says. “They’ve got no idea what it’s like to have people not pay you or have people pay you significantly later.

“They don’t understand. They’ve got zero patience.”

How Specialist Glass Cleaning and Protection manages cashflow and provisional tax in the face of late payments from clients

TMNZ helps Specialist Glass Cleaning and Protection by providing them with more time to pay their provisional tax. Has done since 2011.

It’s a valuable tool if things go skew-whiff because it keeps the taxman at bay, says Heather.

“I find it better to deal with you guys than the IRD. You are as important as my accountant.”

Even if she has the money to pay the tax, Heather still prefers to use TMNZ.

“I’m paying more interest on my overdraft than I am with you, so it makes sense to use you and keep the money in the bank for other costs that could occur instead of worrying about money.

“If you’re worried about money, then you’re not being productive getting work.”

About Specialist Glass Cleaning and Protection

Specialist Glass Cleaning and Protection has been working its magic for 14 years. Balustrade glass, window glass, shower glass and tiles are its speciality.

Clientele is wide and varied. Commercial bus companies (think the likes of Go Bus, Abbott Charters & Tours, Leisure Time Tours and Bethlehem Coachlines) provide plenty of business. Some of the buses they work on are worth a small fortune (more than $1 million). Vehicles, boats – they once worked on 58 metre superyacht Unbridled when it docked in Auckland – and houses provide other gigs. So does G.J. Gardner Homes Waikato. Heather says she is now promoting their services to landscape gardeners.

Specialist Glass Cleaning and Protection uses a product called ClearShield. Explaining the exact science behind how it works is quite technical (too technical for this scribbler, anyway). But here goes: Glass is porous and full of pits and holes. ClearShield works its way into those holes to become part of the glass to offer full protection. This differs from nano-coat varieties, which only offer minimal surface protection.

October to January is when Heather and Peter are normally flat out. They put the typically quiet winter months to good use by marketing the business.

If you wish to learn more about how Tax Management NZ helps businesses match their provisional tax payments to when they earn their income, email or phone 0800 829 888.