Starting up

New Zealand’s financial landscape: what you need to know

3 min read

New Zealand is far from the world’s largest economy, but its consistently strong and stable economic growth in recent years has made it an attractive destination for migrant entrepreneurs.

A key foundation of that economic strength and stability is a transparent, robust and well-regulated business environment. So for migrant entrepreneurs to successfully establish themselves in business in New Zealand it’s essential they have a firm understanding of not just their regulatory and legislative obligations, but also our financial landscape.

Building your banking relationship

Whether migrant entrepreneurs are bringing their startup capital with them in the form of savings, or bootstrapping a new venture by working a day job once they get here, it’s essential they establish a relationship with a bank. Dealing in cash may be the norm in some countries, but in New Zealand all transactions – cash or otherwise – must be accounted for to comply with tax and other business obligations.

In addition, New Zealanders embrace paying electronically – whether it’s consumers using EFTPOS, for example, or business owners paying suppliers by direct credit – and these digital transactions must be facilitated by a bank.

Many New Zealand banks have staff who can speak a range of languages, which can make developing a relationship easier for those who find communicating in English a challenge. Some other key areas where a business banker can offer assistance include outlining lending options; dealing with cashflow and payment solutions; and managing finances using online resources such as a bank’s website or apps.

Finance options

There are many options for those seeking business financing in New Zealand, including everything from the solutions offered by the 24 registered banks to peer-to-peer lenders to invoice financing providers. However the repayment conditions and interest rates attached to the different options can vary greatly, so it’s crucial that any contracts entered into are well understood.

Taking the right advice

Word of mouth can play an important role in migrant communities; this is especially the case for new migrants who are hungry for information but are operating without the established networks they will have built up in their home countries.

Networking with others can be a useful way to pick up recommendations for those who can help you sort your financial matters, but when it comes to choosing someone who will provide sound financial advice it’s important to proceed with caution. To protect consumers’ interests, those offering financial advice in New Zealand must be registered.

Finally, reputation and track record also play an important role in New Zealand’s small economy. A business that has not played by the rules and dabbled in the cash economy for example, could encounter difficulties when seeking growth capital, as that income won’t be accounted for on the financial statements lenders require when making their decisions.

This again emphasises the importance of establishing good business practices from the outset, which are based on sound advice from sources that are professionally accountable and subject to regulation.