Keep Your Cash Flow Intact This Holiday Season

Keep Your Cash Flow Intact This Holiday Season

The Christmas and New Year are the best times to set new business goals for 2016, but you can instantly burst your bubble once you discover that your cash flow has also taken a holiday and there is no way you can materialise your business plans. Yes, cash flow is as equally important as other aspects of your business. Delayed payment collection process is one of the debilitating circumstances that can hurt your business in more ways than one. You can take a holiday all you want this Christmas, but knowing you have unsteady cash flow is enough to cloud your head with worries.

More likely than not, trade payments slow down during and after Christmas and New Year. Usually, payments are made in January, but since there are fixed business costs that need to be paid regularly, your business is most likely to suffer and your plans for the New Year will be completely forgotten due to financial constraint. When your cash flow also takes a holiday, it can be a bad start for your business. A slower cash flow does not stop your daily expenses from piling up. In fact, your business can face a cash flow shortfall if you have not paid much attention to the payments or lack thereof. 

Mindful strategies can get your business going and here are some ways you can survive:

Create a plan to profit: If you have not reviewed your cash flow experience of previous years, it is time you start doing it because preparing ahead of time can reduce the possibilities of cash flow issues especially during the holiday season. You need to prepare for the duration and size of the slowdown so you can still stick to your New Year plans.

Give priority to collections: Make sure you issue invoices promptly and send payment reminders, overdue notices and follow-up calls for overdue payments. This way, you can track your cashflow and avoid facing problems before the holiday kicks in.

Put stocks to better use: Christmas may give you a hard time controlling inventory levels, but there are ways you can still use unsold stocks such as selling off older stocks cheaply. This way, you can free up the cash intended for your on-going expenses.

Review your terms: The holiday is also the best time to assess your payment terms. Offer early payment discounts so you continue to improve seasonal cash flow. If there are large orders you can also negotiate full or part payments ahead of time. Try negotiating extended credit terms with your existing suppliers as well.

Put away some cash reserves: Learn to survive the holiday season by putting away some cash into a savings account with high interest as this allows you to gain flexibility when dealing with your finances. You can also consult with a professional debtor so you will know what your options are.

Christmas can bring a lot of challenges to business owners, but there are still ways to take care of your cashflow without breaking your business plans for the New Year. You just need to have mindful strategies so you can start the year strong.

Tamara Deterding

Written by : Tamara Deterding