The opening months of FY27 have delivered a more complex operating environment than many anticipated at the start of the year. For business finance advisers and brokers, this translates into more challenging conversations with SME clients who are navigating heightened uncertainty, tighter cash flow, and increased compliance risk.

Your clients are looking to you for guidance on how to protect their businesses and maintain financial resilience. Understanding the current landscape and the practical funding solutions available will be critical to helping them navigate the year ahead.

The FY27 operating environment: what your clients are facing

The economic picture has changed noticeably in recent months. The Reserve Bank held the OCR at 2.25% in April, citing events in the Middle East that have materially altered the outlook and the balance of risks for inflation and economic growth in New Zealand.

The recovery that appeared to be gaining traction has encountered headwinds that will likely persist through much of the financial year.

On the fiscal front, the government has trimmed Budget 2026 spending even further. In a pre-Budget speech, Prime Minister Christopher Luxon confirmed the net operating package for Budget 2026 would be $2.1 billion – around $300 million below the $2.4 billion allowance set in December – as the Government maintains its commitment to returning the books to surplus by 2028/29. The message was made clear: businesses should not expect significant fiscal support to offset current economic pressures.

Inland Revenue enforcement: an immediate risk for your clients

One of the most immediate risks your SME clients face in FY27 is Inland Revenue’s intensified focus on overdue tax obligations. Inland Revenue is actively pursuing overdue GST and employer debt through a targeted enforcement campaign aimed at businesses that have not responded to standard collection processes.

The enforcement pathway is systematic and escalates quickly. IRD will attempt direct contact through multiple channels. Where businesses fail to engage, enforcement actions escalate to include site visits, bank account deductions, and ultimately consideration of bankruptcy or liquidation proceedings.

Inland Revenue applied to wind up nearly 900 companies in 2025, and the department has indicated that enforcement activity will continue at similar levels through 2026.

For advisers, this creates an important conversation point with clients. Tax arrears are often an early warning indicator of deeper cash flow stress. When working capital becomes constrained, tax obligations frequently slip down the payment priority list. If you have clients showing signs of cash flow pressure, proactive discussion about their tax compliance position is essential. Falling behind on GST or PAYE obligations can quickly compound into a more serious financial position as penalties accrue and enforcement actions begin.

Insolvency trends: understanding the pressure points

While insolvency statistics reflect past stress rather than current conditions, they provide important context for understanding the cumulative pressure on New Zealand businesses and the risk profile of your client base.

According to the Companies Office, 188 companies entered liquidation in April 2026. Centrix’s March 2026 Credit Indicator shows liquidations at 2,994 on a 12-month rolling basis, up 14% YoY, with February 2026 recording the highest February total since 2009.

These figures represent businesses that could not bridge the gap between revenue generation and financial obligations.

The pattern is instructive for advisers. Businesses that fall behind on tax obligations often find themselves in a deteriorating cycle. Penalties compound, available working capital contracts further, and what began as a manageable shortfall can escalate into a solvency issue. Early intervention and appropriate funding structures can prevent this trajectory.

Credit market conditions: what’s available for your clients

Access to funding remains a critical consideration for SMEs managing cash flow timing gaps. The RBNZ’s May 2026 Financial Stability Report notes that bank funding costs remain sensitive to offshore bond markets, and that banks hold approximately $138 billion in SME lending, representing around 23% of total bank lending.

Banks are lending, but credit assessment has become more rigorous. Businesses with strong balance sheets and clear cash flow visibility will find credit available on reasonable terms. Those with weaker financials or operating in sectors under pressure may face more challenging conversations with traditional lenders.

This is where your role as an adviser becomes particularly valuable. Understanding which funding structures suit which client situations, and which lenders have appetite for different risk profiles, allows you to position solutions that banks may decline or structure inappropriately.

Advising clients on practical cash flow strategies

Your clients are looking to you for practical guidance on protecting cash flow and maintaining financial resilience through FY27. Here are the key areas where your advice can make a material difference.

Stress-testing financial assumptions

Many of your clients will have developed FY27 budgets based on late-2025 assumptions that no longer reflect current conditions. Encouraging them to revisit these assumptions is a valuable first step.

Work with clients to develop scenario models. What is the impact if revenue falls 10% below forecast? What if a major customer extends payment terms from 30 to 60 days? What if a key supplier increases prices by 15%?

This exercise often reveals funding gaps that can be addressed proactively rather than reactively.

Strengthening debtor management

Cash tied up in receivables is cash unavailable for operational needs, supplier payments, or tax obligations. In a constrained environment, debtor management discipline becomes critical.

Encourage clients to review their debtor days trend. If the figure has been increasing, this warrants investigation. Clients should implement tighter credit assessment for new customers and establish systematic follow-up processes for overdue accounts.

For clients with material receivables balances and extended payment terms, this is where Invoice Finance becomes particularly relevant. Rather than waiting 60 or 90 days for payment, they can access that cash flow immediately.

Prioritising tax compliance

This should be a non-negotiable element of your advice. If clients are experiencing difficulty meeting GST or PAYE obligations, proactive engagement with Inland Revenue is essential.

Businesses can manage payments and returns through myIR and apply for instalment arrangements where necessary. Inland Revenue is generally willing to work with businesses that engage constructively, but that willingness evaporates when businesses fail to respond.

As an adviser, you can help clients understand that tax obligations should be treated with the same priority as secured debt. The consequences of non-compliance are severe, and Inland Revenue has demonstrated a clear commitment to enforcement.

Matching funding solutions to cash flow timing

This is where your expertise as a finance adviser or broker delivers the most value. Many fundamentally sound businesses face a structural challenge: the timing of cash inflows does not align with the timing of cash outflows.

A client may have $200,000 in confirmed orders from creditworthy customers but need to pay suppliers within 14 days while their customers pay on 60-day terms. Traditional bank lending may not be the optimal solution for this scenario.

Invoice Finance allows businesses to convert receivables into immediate working capital without incurring traditional debt. The funding is tied directly to sales activity, scaling with the business. For clients with strong receivables but timing mismatches, this can be a more appropriate structure than a fixed-term loan or overdraft.

A Line of Credit can suit businesses that need flexible access to funds for short-term cash flow gaps, seasonal expenses or unexpected opportunities.

The critical factor is matching the funding solution to the specific cash flow gap.

Working with ScotPac: a partner for your clients

At ScotPac, we work extensively with business finance advisers and brokers to support SME clients navigating cash flow challenges. We understand that your clients’ cash flow timing gaps do not indicate business failure. More often, they point to a need for the right financial tools to bridge the gap between earning revenue and receiving payment.

As a non-bank lender, we can move more quickly and structure solutions more flexibly than traditional banks. At the same time, as the largest non-bank business lender in Australia and New Zealand, we have the scale, stability and experience to support businesses through uncertain economic conditions.

If you have clients assessing their FY27 cash flow position and considering funding options, we would welcome a conversation. We can work with you to structure solutions that address their specific needs and position you as a trusted adviser who delivers results.