Don't let Christmas cash flow leave you with a New Year headache
In the lead up to Christmas, it is worth planning now to ensure your business doesn't fall into cash flow crisis over the holiday period.
Retail businesses apart, December is for many one of the worst sales months of the year with January not much better. Orders dry up as people's thoughts turn to Christmas presents and office parties.
Some businesses, perhaps with December year ends, will be frantically trying to complete work before the holidays begin. Others may be occupied in preparing for a big New Year push. All these factors will force cash flow down the agenda.
It is particularly important at this time of year to be invoicing promptly and to agree when invoices will be paid. For example, if a Christmas shut down is going to significantly delay settlement can you negotiate early payment or a payment on account? Are you even on top of your overdue invoices?
Suppliers may be asking you the same questions and with the payroll the biggest expense for most businesses, often paid earlier than usual in December, the pressure on cash is compounded.
We advise all our clients to complete a realistic cash flow forecast and if necessary have a quick conversation with their bank to let the manager know what is going on and to give them a good understanding of any additional support required over the holiday period.
This should ensure a happy and prosperous New Year not one plagued by Christmas? financial hangovers.
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