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Whether your business is large or small, well-established or in start-up mode, you need to take a planned approach to managing cashflow during the holiday season.
December is usually the busiest time of the year for retail and hospitality businesses. But businesses in other sectors often find that their sales slowdown and their customer stop paying them for a few months. So cash flow dries up. Here are some tips for keeping on top of cashflow management during the Christmas/New Year holiday period.
Don't let your business admin slip in the rushed lead-up to Christmas. This is the most important time of the year to stay on top of your invoicing. You may find that many customers will slow to pay because their businesses are closed over the Christmas period.
Be clear with your customers that you expect them to pay within the pre-arranged credits terms over the Christmas period. Phone regular slow payers a few days before payment is due to confirm that they'll be paying on time. The phone is always a more effective method than email. If you're not comfortable having this conversation with your customers, your accountant or bookkeeper may be able to assist.
If your business is usually quiet in January, why not offer your clients a 10% discount if they book you in for January. Why not offer referral discounts if they also refer a neighbour or friend? Set whatever discount amount work for you. This is the thing: A strategy like this will keep your business busy and some cash coming through during the usually quiet period.
If sales are a little slow in the lead-up to Christmas, use the time wisely to hit the ground running in the new year. The pre-Christmas slowdown is a great time to work through the to-do list you've been compiling all year. This might include taking a thorough inventory, searching for more suitable ending alternatives, completing a comprehensive competitor analysis or researching the market for new products and suppliers.
Feel free to contact our office and talk to our expert accounting team - we can't wait to provide you with better advice for a profitable future!