The Christmas and New Year period can be a bit of a cash flow nightmare for businesses. With everyone off to the beach for a month,you’ve got to be smart about your cash. So, here are some things that you can do!
• Look back to plan ahead:
Check out what happened last year
Based on recent and historic patterns, guesstimate when money is coming in and going out
Make a budget that fits the holiday vibe
• Stock smart:
Don’t go overboard on inventory
Maybe run a cheeky pre-Christmas promo?
• Expense juggling:
Put off spending that can wait
Look at your overhead costs – are you getting a good deal?
Underutilised assets – get them working or sell them up
• Get that cash flowing:
Send out invoices early (before everyone disappears to the bach)
If it makes sense, offer a sweet deal for early birds who pay quickly
Keep on top of who owes you what
• Build your rainy-day fund:
Squirrel away some cash during the busy months
Know what you need coming in to cover your fixed costs during the quiet time
• Money options:
Look into a business line of credit (it’s like a safety net)
If necessary, look at tax pooling (it’s like a band-aid for cash flow)
• Keep everyone in the loop:
Let suppliers know what’s up with payments, if you’re going to be late – front foot it
Keep clients in the know about your holiday schedule
A bit of planning now means you can actually enjoy putting your feet up for a few days without stressing about the bank balance! Here’s to starting the new year without a financial hangover!
Why cash flow is important:
This should come as a surprise to no one, but businesses are doing it tough. This is backed up by data. While it’s hard to pin a precise number on business failures, there are very high rates of business insolvencies with at least one commentator calling it a record.
The key to keeping the wolves from the door is managing cash flow. There are a bunch of variations on this quote: “Revenue is vanity, profit is sanity, but cash is reality.” If you look after cash flow while improving profit and revenue (even incrementally), it’ll all work out.