Writing for Business Advice, Rachel Mainwaring, operations director at Creditsafe, reveals how a business owner can ensure that payments come in and Christmas cash flow stays positive.
With the festive season truly under way, the countless parties, mince pies and secret Santa gifts are no doubt beginning to stack up. For businesses, the amount of outstanding invoices is one thing that you don’t want to see added to the list.
The end of the year can be a quiet time for some businesses or a mad rush for others. But regardless, for finance and credit control departments it’s arguably the busiest time of the year.
With many offices and industries shutting down before the Christmas period, there is only a small window to get your invoices paid by your customers. This could mean many businesses go into the end of year with unpaid invoices that can damage next year’s cash flow as they have to cover the unpaid balance themselves.
However, don’t panic. Lots of businesses close over Christmas and are in the same boat as you, so we have provided you with some top tips to ensure you get paid and Christmas cash flow remains positive.
Don’t forget the Christmas shut down
The process of invoicing is sometimes a slow and automated one. If your usual policy is to have automated invoices set up to send at the end of the month, you may want to amend this for December. Offices could work up to Christmas Eve, but Bacs payments will need to have been submitted by today to be received before the holiday shut down.
Know which customers have a December year-end
If a company’s year-end is approaching, some clients will try to keep as much money in the bank as they possibly can for their business to seem like it’s got more floating cash than it actually has when they file their accounts with Companies House.
If you have customers who have an end of year at December 31, they will probably try to avoid paying you until they absolutely have to.
Do some research at Companies House and find out when their end of year is. Chase them for payment more if they are approaching end of year, especially if their end of year is within the shut-down period. Send an invoice out to them as soon as you possibly can to try to get it paid before offices shut.
Have a close connection with your customers
If you know who pays your invoice, try to get to know them and contact their direct lines. Bigger companies may have a finance or credit control department who pay their invoices, however they may not always be the people who sign off for the invoice to be paid. Check your invoices for names of the decision makers and try to contact them. People like people, and if they like you they are more likely to pay you when you ask them to.
Create or improve direct debit payments
The easier you make it for customers to pay you, the more likely you are to get paid.
Direct debits are a quick and easy way to receive both recurring and ad-hoc payments. If you have direct debits set up to go to your account, encourage more customers to use them to pay you before the year ends. If you don’t have direct debits set up, do it for 2017 to ensure a smoother process for the future.
Remember, being polite and friendly will always work in your favour when requesting payment from customers, therefore some festive cheer around December time will no doubt be no different. Be firm with customers, but never aggressive or demanding.
So there you have it, solutions for Christmas cash flow – get your invoices out, your payments in and enjoy the holidays.
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