Christmas, it’s our most favourite time of the year…
Well actually, it can be a really hard time of year if you are in small business. Especially if you aren’t in retail or food related businesses. Your customers are funneling all of their money into gifts, food for the Christmas dinner table and all the festive paraphernalia that goes along with it. They don’t have a lot left to spend on business related expenses. And let’s face it, they aren’t thinking about business at this time of year.
So what can you do to make the festive season a bit easier in the cashflow area? Here are our 6 top tips to improve your business cashflow this holiday season…
You know Christmas is coming up, it does happen at the same time every year after all. Start planning now by forecasting your expected incomings and outgoings for this period. Then when you are in the thick of Christmas trading, keep a close eye on what your cash is doing and when it is doing it. Having a clear picture of your finances will allow you to make crucial decisions where your money is concerned.
2: Assess Payment Terms
Are you hanging around waiting for your money to come in, only to find that it arrives late? It might be time to shorten your payment terms to improve your cashflow. Shorter payment terms can mean a steadier flow of funds in your account. Begin by educating your new clients on your terms and then you can approach your existing clients to advise of the change in the New Year.
3: Don’t Let Debt Linger
Chasing outstanding invoices is not the most fun job in the world, but it is necessary. Sometimes people will genuinely have forgotten about, or misplaced your invoice. A simple reminder can get the cash in your account quickly. As it gets closer to Christmas, the funds become harder to collect. If you let the debt slide now, you are unlikely to receive your funds until January.
You can offer prompt payment incentives, or go the opposite route of threatening to add interest to outstanding accounts. You might choose to offer payment instalments instead of lump sum payments so that it is easier for your clients to source the money.
4: Plan For The Unexpected
There are a lot of extra expenses to contend with in December - office parties, client gifts, and staff holidays. You also have less days of trade becasue of the public holidays, so there are less incomings. Having a buffer fund designated for these expenses will still allow you and your team to take time off, without leaving you feeling broke!
5: Keep The Cash In The Pot
Are there any expenses that you can delay until after Christmas? If there are fees that aren’t due immediately, don’t dish out the cash before you need to. Before you part with your hard earned money, weigh up the pros and cons of any large purchases, repairs or maintenance.
6: Spread The Word
You can’t just lead from the front and be the only one conserving cash. Make sure all of your team members are aware of the need for expense management at this time of year. Sit down with your management team or employees and fill them in on how they can be cash savvy over the holidays.