With the festive season just around the corner, many of us are wrapping presents and planning our holidays as we prepare for the New Year. Although exciting for most people, many small business owners dread the thought of Christmas due to the negative impact the quiet season has on cash flow.
Some of the most common challenges with cash flow at Christmas time are:
As Christmas approaches, many organisations and individuals have their eyes on the holidays, and trying to chase up debtors and fees can become a nightmare. Ensuring your administration team is invoicing as soon as possible will increase vital cash flow. Understanding your customer and the way they operate may assist with timing the invoicing process.
A decline in productivity is not uncommon as we approach the New Year. Many are quick to slow down and slow to start back up in the New Year. It is critical to establish boundaries with debtors, and ensure that reasonable but firm deadlines are in place. Establishing effective communication with your customers is the key to understanding their repayment capabilities. Contacting customers by phone will be far more effective than email.
The holiday season does not only affect the cash flow of businesses. With most workplaces closing down over the Christmas break, consumers will also find themselves struggling to maintain finances and many will defer payments until the New Year, which can take several weeks before it picks back up. If negative cash flows are an area of concern, negotiate part payments with customers. Even the smallest amounts received can have a positive impact on your business cash flow.
One of the main reasons organisations fail during the Christmas break is due to a lack of planning. It is important to identify the essential costs and separate any that can be deferred until normal operations resume. Try to avoid any costly spending on non-essential equipment or capital improvements. These can wait until next year!
Streamlining payments is an easy, yet effective, way to keep on top of your invoices. Automatic invoicing will ensure your invoices are generated as soon as possible. The sooner the invoice is received by the customer, the sooner you will receive the benefits.
If you are after some proactive advice about your business cash flow, feel free to give our team a call before the Christmas break. Even the smallest of changes can help your business.