Managing the flow of cash that comes in and out of the business is a well-known issue for business owners across sectors. But over the Christmas period issues with cash can be increased.
The increased pressure on cashflow over the festive period is often caused by:
- Increased expenditure – Businesses can often require increased stock during the festive period. While also spending on frivolities such as gifts, parties and decorations this is not just limited to individuals.
- Lower outputs – Over the festive period employees take holidays or throw sickies and this leaves a productivity gap to be filled within the business. If you can’t get as many people in the office, or you’re struggling to fulfil orders due to employee absences, then you’re going to feel the pinch even more.
With these things in mind, what can you do in your business to ensure that you have a great Christmas but you’re not left with a cash hangover that lasts until February?
Think of an action plan
A pre-Christmas prep list could be your saviour. Consider the following questions first:
What will be your opening hours?
How many staff do you need to cover shifts?
What is your Xmas party plan?
How many customers do you want to provide cards/gifts for?
Are you going to have any special offers to increase spending?
Do you have enough stock to cover the festive period?
Think about the month before, during and after Christmas and consider the effect on your business. This could shine a light on some really important areas that need your attention.
Avoid the nightmare with this cashflow checklist
- Budget your festive spending – Treating employees, customers and prospects can be exciting. However, ensure that you plan for how you’re going to do this. Extravagant gifts and costly Christmas parties can soon add up.
- Invoice early – Get invoices out as soon as the work has been completed or goods have been shipped. Don’t leave them until the last minute. As there’ll be no one in the accounts department to pay them until everyone returns after the break.
- Accept online payments – Make it as easy as possible for your customers to pay. Then they can pay quickly and on time. By accepting online and card payments you can ensure the business gets instant access to the cash owed to them. You could even offer a small discount for instant payment. After all, everyone loves a discount.
- Stay open or shut down? – If you have a business that really doesn’t do anything over Christmas and employees are sat around twiddling their thumbs – is it worth staying open?
- Don’t forget about January – With all the festivities it can be easy to forget that life will go back to normal, business as usual in January. This can be a slow period for many businesses. But wages still need to be paid, rents may be due and supplier invoices need to be settled. Don’t wait for the final chords of Auld Lang Syne to finish before thinking about the new year.
Manage cashflow by staying prepared
Apply for additional funding now. Leaving applications for finance until the last minute is the wrong thing to do. In case you need additional funds to purchase stock, need a safety net or if you think you will have a cashflow gap during this Christmas period then don’t leave it till last minute.
There are quick wins that can help such as VAT or Corporation Tax funding, Business Loan, Merchant Cash Advances or Invoice Finance all of these types of funding can be applied for prior to being needed and an offer can sit waiting ready for the business to draw down when required.
This list is not exhaustive, and I am sure that you can think of other ways in which you can control cashflow this Christmas.
The key is in the planning, someone once said if you fail to plan then you plan to fail and this is so true when it comes to managing cashflow at Christmas.
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