Well actually, Christmas 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 cash flow area? Here are our 6 top tips to improve your business cashflow this Christmas…
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.
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 cash flow. 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.
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 via a text, email or phone call can get the cash in your account quickly.do you have your xero invoice reminders set-up?
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.
There are a lot of extra expenses to contend with in December – office parties, client gifts, and staff holidays. You also have fewer days of trade because of the public holidays, so there are fewer 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!
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.
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.
We hope this article helps you with your cash flow over this coming Christmas period. Find our other articles relating to cashflow here:
Cashflow Management Principles
How a Small Business Accountant Can Drive Growth
If you need further assistance to understand your cashflow or help improve it, please get in touch.
Business Like NZ has been providing professional yet affordable tax and accounting advice to the Auckland region (and beyond) for years! If you would like to discuss your business with us, please contact us.
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