How to avoid the Christmas Cashflow Crunch
Let’s have a hard conversation about the C words. Christmas & Cashflow.
Santa’s elves whispered to us that Christmas is less than 12 weeks away (at the time of sharing this) which means you need to get serious about planning for the Christmas cashflow crunch.
Most businesses feel the strain of less cash flowing into the business at this time and a lot of cash flowing out.
With staff on holidays, lots of additional expenses like Xmas parties, staff gifts, and office closures closed with often no sales coming in to boost the bank balance, cash is at a premium.
So how do you plan ahead to avoid any cashflow issues over this period?
Here are some tips to get planning NOW:
- Prepare a cashflow plan. This can help you identify any cash deficits or issues that might arise over that period (or beyond if it covers a longer timeframe). Leaving this until December is way too late and won’t help you if there is going to be an issue with cashflow
- Consider changing your payment terms. Having a shorter period like 14 days instead of 30 days means you get paid faster which has a positive impact on cash in the bank
- Change supplier terms. Contact suppliers to see if payment terms can be extended
- Focus on increasing sales. Consider how you can boost sales in October and November by having a special offer, taking on a big project, or finding new clients to onboard.
- Postpone big expenses if possible. If you were looking at making a large capital or asset purchase, consider moving this to another time of the year when cashflow isn’t such an issue.
- Decrease overall expenses. Where can you reduce expenses? Cancel unused subscriptions or change to less expensive phone or internet plans, consider what you are paying for that you might not be using.
- Don’t stop marketing your business. Just because your potential clients are on holiday doesn’t mean they are not looking to purchase your product or service. In fact, they have more time to read articles and do research online so stay visible and top of mind by continuing your marketing over this period
After you have done your cashflow forecast and you need access to capital for Christmas, consider taking out a short-term business loan or turning unpaid sales invoices into cash through debtor finance. And most importantly talk to your accountant NOW so you can be prepared and avoid the Christmas Cashflow Crunch
