Steps to set up good business systems

It’s the unglamorous side of running a business, but all the time and energy you put into making and selling your products or services could be wasted if you don’t pay attention to the administrative side of things. 

Not having effective systems can have significant impacts on your business. For example, cash flow could become an issue if invoices and statements are sent out late, inaccurate, or even completely forgotten. Likewise, if debtors and late payers aren’t followed up, the business will restrict its own cash flow – effectively offering free finance to others.

Poor systems can also prevent you from meeting your obligations to your creditors and to the IRD. For example, if funds aren’t set aside for GST and tax commitments, you could get an ‘unexpected’ tax bill shock and possible late payment penalties. 

Creditors might not be paid on time, so any early payment discount opportunities are lost, and lines of credit may be tightened, exceeded, or withdrawn.

This is why having good systems in place have several advantages.

When good systems are doing the work, you can spend more time working on your business rather than in it. This is good for your stress levels, too, because you understand how things work.

If something were to happen to prevent you from working for a while, you’ll at least have peace of mind knowing you’ve got systems in place to keep the business going.

A business with great systems is much more attractive to potential buyers. It’s more likely to be seen as an independently viable unit and less dependent on the owner, plus it means the business can be transferred to new ownership with minimum disruption. 

When the books are tidy and the record-keeping is up to date, the new owner is taking on less risk.

You don’t want to be worrying about the Inland Revenue, so keeping good financial records and making sure you can meet all your tax obligations is a major stress reliever. 

A good accounting package can be invaluable when it comes to keeping track of your finances. For information on what's available, you can always ask an ANZ Business Specialist.

Good planning helps you set goals. Without them, your business has no direction. But once you’ve created your plan, make sure you don’t just put it in a drawer and forget about it. Review it often – it’s a great way to monitor your progress and refine your strategy where necessary.

If you haven’t created your business plan yet, our step-by-step guide can guide you through it.

Your cash flow forecast is likely to become one of your most important tools. The ability to forecast your cash flow means you can anticipate any problems and take steps before it gets out of control. 

See our guide to refresh yourself on how to do a cash flow forecast.

When it comes to owing money, it’s tempting to bury your head in the sand. On the flipside, when you’re owed money, it’s common to have a ‘she’ll be right’ attitude.

But these are two common causes of small business owners experiencing stress and anxiety. 

Pay your creditors on time (and communicate if you’re having issues) and don’t let your debtors use you as a free banking service.

If you can’t measure it, you can’t manage it. Keep on top of your business by monitoring its performance. 

Review your business plan regularly and ask an ANZ Business Specialist or your accountant about key business ratios to monitor. Our guide on checking the financial health of your business covers four most common types of ratios used by business owners.

How do things get done in your business? Creating operations manuals which explain your business processes in simple, easy-to-follow steps helps ensure that if you or a staff member is sick or on leave, others can take over. It also forces you and your staff members to think through activities and refine them. 

Having operational manuals may sound dull, but they add value to your business by making sure everything’s done in a systematic way. For example, having set processes for invoicing and debt control help ensure you get paid faster. It also gives prospective buyers or investors confidence that the business is well-run and will survive if you or key staff leave.