Christmas is different for every business. While those in retail will see a huge ramp up in sales as competition heats up, other companies could experience their slowest time of year in December. Whichever market you serve, keeping a small business running smoothly is demanding on both time and resources. It can often feel like a 24/7 commitment – according to new research, just 28% say they turn off their phones and laptops after business hours* and Christmas is no different.
To ensure there are no nasty surprises for your business this festive season, and to give you the reassurance to take some much-needed downtime, keeping on top of your cash flow is essential – regardless of your sector or consumer base.
Keep ahead of celebratory spending
The holiday season puts everyone in a good mood. It could that you’ve decided to reward your team with a bonus this year at the last minute. Or maybe the Christmas cheer means some unexpected client lunches have appeared in your diary. No matter what, keep note. Make sure that you’ve taken into account the bills you need to pay beforehand. Also, think ahead – if Christmas is a busy time for your business, be prepared to siphon money to savings accounts to help cover any upcoming quiet periods.
Whatever you have planned, make sure you account for both the expected, and unexpected. That could be anything from mince-pies to increasing stock.
Prepare for a flurry of late payments
The holiday season inevitably means employees will be taking time off – including supplier payment approvers. Small businesses in particular need to be prepared for late payments. Bank overdrafts can be costly and using company credit cards to bridge the gap can aggravate cash flow problems. Anticipating this delay while knowing your customers’ and suppliers’ Christmas plans will be key in ensuring you stay in the black.
Tip: Do your sales have a good profit margin? Offer a Christmas discount to encourage earlier settlements or instant payment.
The season of giving
The festive season can be difficult for every business. Keep communication going with your customers and suppliers as they will be in the same boat with the same cash flow concerns. Maintaining good business relationships is an important part of driving business success, and can go a long way if you are ever faced with calling in a favor or re-negotiating terms.
* Results taken from Xero’s ‘Make or Break’ report: an investigation into what separates successful entrepreneurs from those who fail.
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