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The festive season can present a lot of added financial challenges for business owners. Being organised and having a plan in place is key to avoiding the pitfalls that can affect Christmas cashflow. So how can business owners best prepare for the financial fluctuations of the festive season? In short, you need to identify likely challenges and common mistakes and put in place strategic plans for avoiding blunders.

Some Common Challenges

• Staff on annual leave and/or business closures
• Supplier invoices being forgotten, resulting in penalties
• Cashflow may slow down or stop while overheads still need to be paid
• Some clients may be late to pay due to Christmas closures or staff on leave
• Retailers may face added staff overheads e.g. extra Christmas casuals
• If operating longer hours such as late-night Christmas trading hours, there may be increased wage, tools, equipment, stock or utilities costs
• Some businesses experience a New Year slowdown in sales

Tips for Avoiding Problems

1. Forecast your cashflow. Talk to us about producing an accurate cashflow forecast. We can identify when you will need to save and when you are safe to spend. We will work out when you are most likely to have higher expenses so you can be prepared for 2020.
2. Stick to your budget. When we know what to expect from your 2020 cashflow, we can help you to set a manageable budget. It is up to you to make sure the business sticks to it!
3. Invoice as soon as possible. If it is considered fine to do so in your industry, ask clients for a deposit. Some contractors, for example, may request half up front and the remainder at the end of a project.
4. Follow up on late payments. December and January are common times for people to delay payments, so make it clear what your terms are and follow up on unpaid bills right away.
5. Clear out any items that are overstocked and tighten up your inventory. Do not let all the business’ cash sit on the shelves.
6. Consider debtor insurance. Protect yourself from unpaid invoices that may result from your clients’ business cashflow issues. Your insurer may cover you in instances where your customer goes bankrupt or defaults before paying you, among other reasons. Policies differ so it is good to shop around.
7. Delay big spending. If it is possible to put off any large business purchases until the new year is back in swing, it is worth the wait. Once more cash is flowing, you can be more confident in making those larger purchases.
8. Close if you need to. If your customers stop walking through the door during the holidays, it could be worthwhile to shut down. Depending on the business type, you may end up saving significant amounts on operating expenses.

Properly forecasting your cashflow should not be left until the last minute. If you are feeling the pinch right now, come and see us about preparing for a smoother 2020. Talk to us about monthly cashflow reporting so you can always stay on top of your business figures and remember, if you are having trouble recovering in January, February and March, our friendly team is here to help you get back on track. We will help you put in place a set plan that is easy to follow and understand so you can sleep at night.

If you’d like to know more about cashflow and budgeting for your business’ future milestones, get in touch with CountPlus One. We would be happy to assist you with sound advice you can count on.

Written by Siobhan Sada and Phillip Grantham