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Explore how to pull the right levers to improve cashflow and extend your business's runway or safety net.

Actionable strategies for extending your cash runway through increased revenue, expense reduction and additional capital.

3 ways to extend your cash runway

You’ve probably heard the phrase “cash is king” a million times and that’s probably no truer than in business. While it might not look like physical bank notes in the pure sense of the word, having cash in the bank is what helps keep your business running.

This is why understanding your cash runway/buffer and the levers you can pull to extend them are important. Your cash runway is how long your business could survive on current cash reserves, assuming revenue and expenditure remain unchanged. Meanwhile, your cash buffer is the safety net of how long you could keep going if revenue stopped altogether.

Businesses that are facing challenging or uncertain times often consider extending their runway or buffer so they’re well-equipped for any hurdles that may come. There are three ways to do this: increase revenue, reduce expenses and/or inject capital. Most businesses look to do a combination of all three.

Improving your cash inflow isn’t just about generating more sales. It can involve freeing up liquidity and exploring other opportunities to earn more income or change how you’re collecting that income.

Speed up your accounts receivable: This can be through early payment discounts, tightening payment terms or even improving follow-up on unpaid invoices.

Reduce inventory: Sell off stock that’s collecting dust. Even if you sell it at cost, that’s cash that’s now in the bank rather than on a shelf.

Sell redundant assets: If you have equipment or tools that aren’t needed for core operations, selling them can inject much-needed cash into the business. Consider it spring cleaning for your business.

Increase prices: If costs keep climbing and you haven’t increased your prices in a while, it might be time to consider it.

Drive more sales to existing customers: Upsell additional services, cross-sell complementary products or increase order frequency.

Consider new business or payment models: Explore alternative revenue streams or pricing structures. This could be a subscription model instead of one-off sales, a service tier you didn’t have before, or finding ways to still generate sales during off-peak periods.

Focus on high-margin offerings or markets: Not all revenue is equal, so consider letting go of revenue streams that aren’t pulling their weight and refocus on ones that are.

Cutting costs to extend your runway or buffer doesn’t mean your business needs to suffer. It just means being more deliberate with what you’re cutting or adjusting.

Reduce nonessential spending: These are expenses that don’t directly affect operations.  For example, travel, conferences, or team celebrations.

Downgrade or cancel software subscriptions: Most businesses have software tools that are no longer being used or are costing them more than it should.

Pause major hires: Hiring freezes or even a redundancy (which may be a difficult decision) can have a dramatic impact. While not always the easiest decision or conversation to have, these decisions are sometimes necessary.

Renegotiate supplier terms: Extending payment terms by 15-30 days or negotiating volume discounts on fast-moving products can make a small but useful difference.

Review fixed costs: Are you still paying the best rate possible for your insurance, internet, and power? In the same way you typically audit these in your personal life, it’s a good idea to periodically review these for your business too.

Delay planned purchases: Postponing non-urgent purchases or equipment upgrades can free up some short-term cash and give you additional breathing room. You can always reassess priorities once your runway is more comfortable.

Sometimes extending your runway or cash buffer requires external capital. This can include:

Owner injection: If you’re able to, putting some of your own money back into the business can buy you some breathing room without the complexity of outside financing.

Crowdfunding or capital raises: Consider getting additional funding via a crowdsourcing campaign or from angel or venture capital investors.

Grants and subsidies: See what government or local support is available. Sometimes there is industry-specific funding available or grants for particular types of projects.

Bank finance or alternative lending: Lines of credit or loans can help you in the interim while you focus on improving your runway through some of the other areas we’ve mentioned. You could also consider invoice financing (finance based on unpaid invoices) as a short-term measure.

We won’t lie and say extending your runway or cash buffer is easy. It can take some serious effort and sometimes difficult conversations with team members, suppliers or creditors. However, the payoff can be significant. Any move that makes you feel less stressed about surviving the short-term and more confident that the business is ok and can weather any storm is a win in our books.

If you’re unsure which levers to pull, your accountant is a valuable resource to help. They can model different scenarios and provide advice on which actions will have the biggest impact.

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Business advice

Understand the difference between cash runway and buffer to better prepare for unexpected events.

Understand the difference between cash runway and cash buffer to better prepare for unexpected events that may occur in your business.

Cash Runway vs Cash Buffer

It’s a known fact that many businesses fail due to poor cashflow. That isn’t new knowledge and unfortunately is a statement that will likely always ring true. This means that any metrics that provide insight into cashflow are vital for staying afloat and knowing where you actually stand. That’s where cash runway and cash buffer come in. They're both surprisingly simple to calculate and help you prepare for the unexpected.

Cash runway measures your survival time i.e. how long your business could operate for at its current burn rate before it runs out of cash.

Cash runway = current cash balance / net cash burn
Where net cash burn = monthly cash outflows - monthly cash inflows

Example: You’ve got $100,000 in the bank. Your monthly cash inflow (revenue) is $10,000 and your monthly cash outflow (expenses) is $35,000. Your net monthly burn is $25,000. That’s 4 months of runway at the current burn rate.

Cash runway is commonly used by businesses that are spending more than they're earning. These are typically startups or growing businesses that have received investment and can afford to burn cash while they build up enough revenue to be profitable. Their runway is an estimate of how long the business can keep running for without generating any new revenue to offset the higher expenditure. The shorter the runway, the more urgently businesses need to either increase revenue, reduce costs or secure additional funding.

Cash buffer measures your safety net i.e. how long your business could operate for if revenue dried up and you had to survive purely on cash reserves.

Cash buffer = current cash balance / monthly cash outflow

Example: You’ve got $100,000 in the bank, and your monthly operating expenses are $10,000. If your revenue disappeared overnight, you’d have roughly 10 months before cash ran out.

Cash buffer is typically used by businesses that are cashflow positive. For these businesses, the runway is technically infinite (since they’re earning more than they’re spending each month), so cash buffer is the more useful metric. It's a helpful gauge of how long the business could operate for in a worst-case scenario where you’ve stopped generating any revenue. It's also a simple way of evaluating if your cashflow is worsening, expanding or staying steady. If your buffer shortens over time, the difference between what you're earning and spending is closing. If your buffer is getting longer, then your cashflow is strengthening and you're building a larger safety cushion.

A startup or high-growth business might be comfortable with only 3 months of runway because growth and fresh investment are imminent. On the other hand, a mature and stable business would probably aim for at least 6 months. Most healthy businesses sit somewhere between 6 and 12 months.

You could also think of these metrics a bit like you would an emergency fund. If your runway or buffer is 2 months, you’re not in crisis just yet. However, you’re definitely playing close to the edge and might be feeling the pressure to bring in more money or cut costs. If your runway or buffer is 18 months, you’ve got quite a bit of breathing room and you won’t be feeling like there’s any kind of current cashflow emergency.

Why they’re an important business metric

When you understand your runway/buffer and how they’re trending over time, you’re in a better position to make decisions and weather any storms.

Spending a lot of cash in order to grow is fine if you know you have time on your side. Likewise, a healthy buffer provides reassurance that you can cope with any setbacks (such as a delayed customer payment or slow quarter), as well as confidently invest in growth (such as hiring or expansion).

These metrics can also help with forecasting. When you know where your business currently stands, you can forecast where you expect to be in 3 months or a year's time, and even model different scenarios. What if revenue grows 20%? What if a major customer disappears? What if we hire another person? What if the economy weakens?

Having this understanding of how much breathing room you have helps balance your business goals with actual financial stability.

The great news is that if you’re using accounting software like Xero, you don’t even need to calculate these metrics manually. You can access it directly in the software.

Reviewing the number and keeping track of how it changes each month is the first piece of the puzzle. The next piece is working out what that means for your business specifically. That’s where regular check-ins with your accountant can be handy. They can spot where cash might be getting stuck or help you understand which levers to pull if you need to extend your runway or buffer. On the flipside, they could also make recommendations of what to do with your cash if you feel like your runway or buffer is too long.

Financial literacy

Discover how AIM works, including eligibility, filing requirements, and the benefits for seasonal businesses.

Learn how the Accounting Income Method (AIM) works for provisional tax in New Zealand. See eligibility, filing requirements, and benefits for seasonal businesses.

Understanding the Accounting Income Method (AIM) for Provisional Tax in New Zealand

If you run a small business in New Zealand, provisional tax can often cause a bit of a cashflow crunch if your income is seasonal or fluctuates year to year or even quarter to quarter. The standard method of calculation relies on last year’s numbers, leaving you vulnerable to paying tax on money you might not have earned yet in the current year.

With the Accounting Income Method (AIM), the calculation takes a different approach. It’s more of a pay-as-you-go system that calculates provisional tax based on actual income. Introduced by Inland Revenue in 2018, AIM was designed to help businesses with variable or unpredictable income manage provisional tax in a way that actually reflects what they’re earning.

Under AIM, provisional tax is calculated based on your income from real-time accounting data, reported at regular intervals through a statement of activity. Rather than paying a set amount based on last year's tax, you file statements showing your income as the year progresses. Inland Revenue then determines whether you need to make a payment based on what you've actually earned.

The key difference from other methods is that you only pay provisional tax when your business makes a profit. If you have a period where income is low or you make a loss, you won't owe provisional tax for that period.

AIM can be used by individuals and companies with an annual turnover under $5 million and who use AIM-compatible accounting software (e.g. Xero).

Your business is new and you expect variable income

You experience seasonal fluctuations (e.g. tourism, farming, agriculture, construction)

Your income has reduced significantly since last year

You keep up-to-date, accurate accounting records

The standard method applies a set percentage (5%) to your prior year’s income tax. Essentially, it assumes that your income will be that percentage higher year-on-year. For example, if your tax bill last year was $20,000 then your provisional tax for the current year will be $21,000 (split across 2 or 3 instalments). It’s much simpler to calculate and works well if your income is relatively stable across the year.

On the other hand, AIM requires regular reporting of actual income so that provisional tax is adjusted based on real figures. This means more active involvement, but pays off if your circumstances don’t fit the standard method. For example, if you have a business where 80% of income is earned across a 3-month peak season.

Imagine you run a tourism business with seasonal patterns. Summer months are busy, but winter slows down considerably.

With AIM, you'd file a statement of activity monthly or every two months (depending on your GST registration). In a busy month when you've earned $15,000 in income, your accountant calculates the provisional tax due on that month's profit and you pay it. In a quieter month when income drops to $5,000, your provisional tax payment is proportionally lower. If a particular month shows a loss, you don't pay any provisional tax for that period.

This means your provisional tax payments actually match your cashflow. You're not paying large lump sums based on annual estimates, then waiting until year-end to find out whether you've overpaid or underpaid.

Filing requirements and payment frequency

When you use AIM, you must file a statement of activity with Inland Revenue through your accounting software. The frequency depends on your GST frequency.

Monthly if you’re registered for monthly GST filing

Every 2 months if you’re registered for two or six-monthly GST filing

Every 2 months if you’re not registered for GST

Each statement informs the IRD of your actual income for that period and is used to determine the provisional tax amount.

It's worth noting that AIM users are automatically switched to the standard provisional tax method at the beginning of each financial year. If you want to continue using AIM, you simply file your first statement of activity for the new year, and Inland Revenue will automatically update your account.

For detailed information on provisional tax deadlines, due dates and the broader provisional tax system, refer to our guide to provisional tax.

If you're a Beany client, AIM calculations and reporting is available as part of our full accounting service. We can manage the regular statements of activity and ensure you're paying the right amount at the right times. If you're wondering whether AIM is right for your business or want to explore how it would work with your specific circumstances, we can talk through your situation and help you make the decision that suits your cashflow and business model.

Learn the key causes of profit erosion and how to optimise for sustainable business growth.

Discover why increasing revenue doesn't always lead to profit growth. Learn the key causes of profit erosion and how to optimise for sustainable business growth.

Why growing revenue isn't the same as growing profit

Many business owners assume that growing revenue automatically means profit will grow at the same rate. More customers, more sales, more money. The logic makes sense but it’s not always the case.

It can often feel frustrating. You're working harder, revenue is climbing, and things seem like they're going really well, but your bottom line doesn't reflect that.

This is because revenue and profit are two very different metrics. A business can generate significantly more revenue and still see profit stagnate, shrink or even disappear entirely. Beneath the surface of revenue growth are often inefficiencies or other problems that quietly erode profit margins. When this happens, the business ends up in a weaker financial position even though it seems more successful from a revenue perspective.


What causes the gap between revenue growth and profit growth

When revenue increases but profit doesn’t keep pace, it usually comes down to one or more of the following:

Software and subscription costs that accumulate from needing additional software or user licenses

An increase in the cost of delivering your product/service

Rising customer acquisition costs from expanded advertising, market saturation or less efficient channels

Pricing not keeping pace with rising costs

Heavy discounting that generates sales volume but lowers profit margin per sale

Internal processes that haven’t scaled efficiently

Capacity constraints when demand exceeds what existing systems can handle

Extra admin and support burdens that can come from having more customers

Payroll growing at a faster rate than revenue

Taking on clients or projects that cost more to serve (i.e. more revisions, customisation, or support than your average customer)

Growth weighted towards lower-margin products or services rather than higher-margin ones

Increased product returns and refunds that add processing and admin costs

When a business is growing fast, it's easy for a few of these to compound at the same time. Sales are coming in and the product or service needs to be delivered, but the processes and costs behind it are under pressure to keep up. The combination of these pressures is often what creates the gap between revenue growth and profit growth.

They ramped up their advertising spend and offered frequent promotional discounts. Their sales volume climbed, resulting in revenue growing from $1,000,000 to $2,000,000. However, the extra volume pushed up fulfilment costs and return rates. The profit made was $140,000.

They reviewed their product mix, discontinued two low-margin lines, and streamlined the delivery process to cut out a step that was adding extra admin time to every job. Their revenue remained steady at $1,000,000 but the improvements to product mix and operations led to better overall margins. The profit made was $220,000.

Business A looks twice the size on paper, but Business B is the more profitable one. Business A retains 7 cents from every dollar of sales, where Business B retains 22 cents from every dollar of sales.

Business growth should always aim to improve your financial strength rather than just making you (and your team) busier. 

At a minimum, revenue and profit should grow at the same rate, so if revenue grows 5%, net profit also grows 5%. In a well-optimised business, profit should actually grow faster than revenue, so if revenue grows 5%, net profit might grow 7-8%. This is because the business is set up for sustainable growth which allows revenue to increase without negatively impacting margins.

To optimise your business for sustainable growth:

Build scalable systems and operating procedures that work well today and will easily hold up at double your current size

Track profitability by product, service or client type so you can focus on growth that’s actually worth having

Set strict boundaries around discounting and scope creep to protect net returns on every job/sale

Audit recurring costs quarterly or every six months (especially software subscriptions which are notorious for cost creep)


If you’re not sure where to start, your Beany accountant can help you understand what’s driving your profit and where your costs are creeping up. If you’re not working with an accountant or looking for a new one, get in touch with us for a chat about how we can support your business.

Why growing revenue is not the same as growing profit

Businesses overpay on software by up to 30%. Uncover your hidden SaaS subscription costs and boost your net profit.

Overpaying for unused software seats or forgotten tools? Learn how to identify hidden subscription costs and boost your net profit without growing revenue.

5 hidden SaaS subscriptions draining your business profit margin

You don't always need to grow revenue to grow profit. Sometimes the fastest win is finding the money you're already losing.

Software is an expense line that is supposed to make businesses more efficient. However, many businesses experience what we call SaaS bleed, where recurring software charges eat into profit margin without anyone noticing. 

Studies have found that the average business overpays on software by as much as 30% thanks to unused seats, redundant tools and missed cancellation windows. The good news is that unlike most cost-cutting, this one doesn’t often require a painful trade-off. It just requires a closer look at where your subscription dollars are actually going. 

Here are 5 types of SaaS subscriptions where unnecessary cost is hidden and what to do about each one.

Tools that charge per user can look affordable at the start, but the cost multiplies as teams grow, roles change and employees leave.

Wasted spend usually happens in two ways. Someone is given full paid access when guest-level permissions would have done the job, or a former employee or contractor’s account stays active for months (sometimes years) after they’ve left. Either way, you’re paying for an empty seat/user.

To stop paying for unused seats, implement a strict IT offboarding process that revokes licenses or archives accounts the moment someone leaves. While this won’t capture cost leakage related to people who’ve swapped roles or users who’re no longer using a particular tool, this will at least put a stop to paying for seats of departing team members.

Some software plans come with user, volume or usage thresholds that trigger significant automatic price increases once you cross them. The frustrating part is that this often happens through normal everyday growth. For example, a contact list expands from marketing activity, inactive users still count towards your total, or a misconfigured or old automation that’s executing tasks in the background.

To prevent these price jumps, regularly clean database lists to get rid of unengaged or bounced contacts, and set usage alerts or caps so you’re not pushed up a tier unnecessarily or without warning.

This one’s more common that most business owners realise. Different teams often buy software to solve an immediate problem without checking if an existing tool can do the job. This results in the business paying twice for the same capability.

To stop paying double, audit your tech stack by functionality and evaluate whether any existing software can be consolidated.

A niche tool gets bought for a one-off project or a single employee’s job, but the recurring charge continues long after the project ends or the employee no longer needs it (or worse has left the business entirely).

Individually, these charges might be small. $10 here, $40 somewhere else. Add them all together and they’re a real margin killer especially if no one is actively using what you’re paying for.

Design, prototyping or stock asset platforms

To catch these sneaky charges, conduct a quarterly review of recurring software expenses and confirm that each one is still genuinely needed.

Free trials and first-year discounts are great for testing whether a tool actually earns its place in the business. However, once the introductory period expires, most tools convert automatically to a full-price subscription or annual commitment. If no one actively reviews whether the tool is worth it, the new cost becomes permanent without ever being questioned.

To prevent this silent cost creep, keep a record of trial and promo ends dates, and set a precedent of reviewing these tools in advance so you can cancel, negotiate a second-year discount (if possible) or actually justify its ongoing use well before the full price comes into play.

For trials, you could even consider using a virtual card with a low spend limit (e.g. $1) so that if someone forgets to cancel, the payment simply declines instead of going through unannounced.

Recovering 10-20% of your software spend is one of the easiest ways to improve profit margin with minimal effort.

If you want to tackle all wasted spend at once, the place to start is by exporting the last 60 days of credit card statements and going through every recurring software charge line by line. Cancel unused software, consolidate redundant or duplicate tools, and remove unneeded paid seats.

It might be an hour or two’s work but those cost savings go straight to your bottom line.

The hidden subscription costs draining your profit margin

A step-by-step guide to claiming the RDTI in New Zealand. Guidance on registration, technical approval and filing.

TAX  •  24 AUGUST 2026  •  5 MIN READ

The RDTI claims process

The Research and Development Tax Incentive (RDTI) is a great programme for New Zealand businesses engaging in scientific or technological R&D, offering a 15% tax credit on eligible spending. However, with this comes a lot of paperwork, legalities and compliance requirements.

To make it simple, we’ve broken down the four steps required for claiming the RDTI credit: registering via myIR, applying for activity approval, keeping detailed project and expense records, and filing a supplementary return.

Similar to GST and other tax types, you must register for RDTI with Inland Revenue. This indicates your intention to claim the tax credit.

Log into your business myIR account, go to the “I want to” section and select “RDTI enrolment”

Answer some initial eligibility questions, such as whether you’re a private sector business, likely to spend at least the minimum threshold ($50,000), and will perform the R&D activities in New Zealand.

The IRD will then confirm eligibility. If confirmed, they’ll provide access to the forms required for step 2.

Once your business is registered, you need to get your specific R&D project approved. This is the technical stage where you prove your project qualifies as genuine R&D.

Complete the General Approval application form*

Submit the application before the deadline. For a standard 31 March year-end, the deadline is 30th June. If your business has a different year-end, it’s the last day of the 3rd month following your year-end.

Wait for your application to be assessed. If approved, it may be valid for up to 3 years, including the year in which you applied.

*General Approval is what most businesses apply for, but there is another option called Significant Performer, which requires at least $2 million in annual eligible R&D expenditure and has a different application form.

Information required for General Approval

Since this step is all about proving your R&D activities meet the criteria for RDTI, there is a significant amount of information required.

Project name and a high-level summary of the project’s objectives

What scientific or technological uncertainty you’re trying to solve i.e. why standard industry or public knowledge can’t solve this

What systematic approach you intend to follow to resolve this uncertainty i.e. what step-by-step method you’ll use to prototype, data model, or experiment

Who the Competent Professional leading the project is and their qualifications and/or experience i.e. proof that a qualified person looked at the problem and agreed it couldn’t be solved using already-available methods

List of core vs supporting activities i.e. the actual activities that are being carried out to try and solve the uncertainty and the tasks that relate to or support the core activity, such as sourcing materials or equipment

If this stage feels overwhelming or you’re unsure about anything, there are some great resources available to help.

The official RDTI government website has information on activity eligibility as well as example applications.

They also offer a free support service where a specialist can look over your draft application, answer questions and give feedback before you submit. While their advice isn’t legally binding and doesn’t guarantee approval, it’s a helpful resource if you want some assistance.

Once your project is approved, you’re officially able to claim RDTI. With that comes the next lot of compliance obligations.

Inland Revenue requires real-time evidence that your spending matches your R&D activities. You can’t retrospectively update all your records at year-end or rely on guesswork. You must track projects and financial information as you go.

Keep clean project logs at each step of your R&D journey

Use specific tracking categories in your accounting software to record spending on R&D activities. This should be kept separate from expenditure on business activities that are unrelated to your R&D project

When you submit your final year-end numbers (in step 4), they must seamlessly match your internal project logs. If they don’t, the IRD’s automated filters are likely to flag your claim for a manual review and you may be hit with a bunch of follow-up questions or an audit.

Step 4: File the Supplementary Return (IR1060)

This is the financial phase after year-end where you actually claim the tax credit. This is done alongside your normal income tax return.

The Supplementary Return requires a breakdown of the exact financial information related to your R&D project.

The General Approval reference number that was issued

Employee labour costs for hours worked on approved R&D activities

Costs of raw materials or items used during testing

Overhead costs such as rent and utilities

Adjustments for ineligible expenditure i.e. costs that are excluded from RDTI claims and portions of costs related to other (not R&D related) business activity 

The supplementary return is due within 30 days of your tax return due date. For businesses with a standard 31 March year-end and a tax return deadline of 7th July, this means your supplementary return is due by 6th August. For businesses with extension of time and a 31st March tax return deadline, your supplementary return would be due by 30th April.

While the official RDTI website offers great resources for the technical application, pulling together the financials required for the annual supplementary return can be daunting.

This is where an accountant is vital. They can help you manage the claiming side of RDTI and ensure that all the expenses are calculated correctly to maximise the 15% credit without triggering any red flags in Inland Revenue’s systems.

If you’re looking for an accountant that understands the RDTI claims process and what’s required, Beany can help. Get in touch or book a discovery call to discuss your business accounting requirements.

Learn how provisional tax works, the different calculation methods and the payment deadlines for each method.

TAX  •  21 AUGUST 2026  •  5 MIN READ

Learn how provisional tax works in New Zealand. Discover the four calculation methods and key deadlines.

Understanding provisional tax

Provisional tax is where you pay your income tax in instalments throughout the year, rather than in one giant lump sum after the year ends.

If you run a business or receive other income that isn’t taxed at the source (like rental income), provisional tax kicks in once your tax bill for the previous year exceeds $5000.

You might be asking, “But why do I have to prepay my tax?”

When you’re an employee, your employer deducts tax automatically every pay period via Pay As You Earn (PAYE). As a business owner or landlord, tax isn't usually paid as income is earned. Settling your bill in one go at the end of the year creates two main issues:

The IRD has to wait a full year to collect tax on income you’ve already earned.

With a massive lump sum bill after year-end, you don't know in advance exactly how much it will be.

Provisional tax solves this by breaking your income tax into smaller payments throughout the year, followed by a final "wash-up" payment called terminal tax. Here is how it works and how to manage it without straining your cashflow.

The standard method takes your previous year’s tax bill and adds a percentage (5%) to guess your current year’s tax. If your previous year's tax return has not been filed, then it is the year before that plus 10%.

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