Running Coffer with a revolving credit account

Plenty of contractors run their whole business through a revolving credit account (ANZ Flexi and BNZ TotalMoney are common examples): a lending facility where income gets paid in, expenses come out, and the balance floats up and down against a credit limit. This article covers why that setup pairs naturally with Coffer, and how to configure the overdraft limit so the dashboard tells you the truth.

How these accounts work

With a revolving credit facility, interest is calculated daily on the amount you have drawn. Every dollar sitting in the account reduces that drawn amount, so money parked there means less interest accruing each day. That is why people route everything through the facility: cash that is just waiting around, including the tax you have collected but not yet paid, is working against the loan the entire time it sits there.

The catch

The account shows one number. The GST from last month's invoices, the income tax quietly accruing toward your next provisional instalment, the money that is actually yours: all of it is blended into a single balance, and all of it looks spendable. Move the tax money to a separate savings account and it becomes visible again, but it stops offsetting the loan. Keep it in the facility and it keeps saving you interest, but nothing tells you where the line is.

This is the exact problem Coffer exists to solve. The ringfence is the separation: your money stays in one account, working as hard as it can, while the dashboard tracks which part of the balance is spoken for by IRD.

Setting it up in Coffer

Enter the facility's balance on the Bank page the same way you would any account. If you are currently drawn down, the balance is negative, and Coffer handles that without complaint. From there the usual math applies: latest balance, minus ringfenced GST, minus ringfenced income tax, minus pots, equals yours to spend.

The overdraft limit setting

Settings has an overdraft limit field, and it changes what “Yours to spend” counts. There are two honest ways to run it:

• Leave it at zero. The dashboard counts only the cash that is actually in the account. Undrawn credit is invisible. This is the conservative reading: credit is not money.
• Enter your credit limit. Your spending room becomes the balance plus the undrawn limit, and the ringfences are deducted from that. This matches how a revolving credit facility is actually used day to day: the facility is the working capital, and the useful question is how much of it is not yet committed.

A worked example with the limit set: a $20,000 facility drawn to −$6,000 gives $14,000 of room. With $5,500 ringfenced for IRD, “Yours to spend” shows $8,500. That is the amount you can draw for yourself before you start spending money that belongs to the tax bill.

When the IRD bill comes due

Pay it straight from the facility. The ringfenced number has been tracking exactly this moment: it is the part of your drawn capacity that was never yours to keep. After you log the payment as a tax event, the ringfence drops by the same amount, and “Yours to spend” barely moves. That is the system working: the bill was already accounted for, so paying it is uneventful.