As 2018 draws to a close, itâ€™s time to take a well-earned break and reflect on the year â€“ both your professional and personal, achievements and challenges. Reflecting gives you an opportunity to learn and grow, and winding down is essential as it gives you a chance to recharge your batteries.
From all of us at Xero we wish you a very happy holidays. However, just because youâ€™re on holiday, it doesnâ€™t mean your business is. Businesses can and do encounter challenges over the holiday period and are particularly prone to cash flow problems during this time.
Xero Small Business Insights shows us that in the past year, on average only 50.9 percent of New Zealand small businesses were cash flow positive in any given month. While this is higher than both our UK and Australian counterparts, it still means that at any given time, almost half our small businesses are battling cash flow challenges. If we delve deeper into the numbers too we can see that January presents a real challenge with only 38.6 percent of businesses cash flow positive in that month. Thatâ€™s a significant deficit for a business to start off the calendar year with.
All is not lost though – putting in a bit of extra leg work before you take a break can make a real difference in getting your invoices paid in a timely matter, ultimately giving you the best chance to avoid the silly season cash flow battle.
Here are a few ideas to help you smooth out cash flow and ensure those payments keep coming in while youâ€™ve got your feet up.
- Make sure all your invoicing is up-to-date before you clock off for the year. If invoices arenâ€™t processed before Christmas, youâ€™re unlikely to see payment until well into the New Year.
- Let Xero do your debtor chasing for you by making use of online invoicing and features such as invoice reminders. Invoice reminders are proven to have a positive impact â€“ in fact, we know that in the first 25 days after payment is due, overdue invoices with reminders get paid an average of four days sooner than those without.
- Make the most of the technology on offer and consider offering your clients or customers an alternative payment type such as Stripe or Paypal. Invoices paid via these platforms in conjunction with Xero are paid 10 days faster than other invoices.
- Make use of cash flow forecasting apps such as Float which allow you to better understand your current and future cash position. Float is one of Xeroâ€™s 700+ add-on apps and works to automatically update your forecasts with Xero data.
Spending a little extra time this side of Christmas can pay big dividends for your cash flow position in the New Year. With the peace of mind that your business is going to keep ticking along you should then be able to go into your break more relaxed and able to fully unwind.
Happy holidays to you and yours – be safe, be merry and have a wonderful break!