Cashflow and Christmas – top tips to get your business through with money in the bank

By Melinda Oliver

Christmas can be a tough time for consumers when it comes to cash flow, but it can be equally difficult for businesses.

As reported recently in SmartCompany, some businesses are taking nearly two months to pay their debts, putting SMEs into a troublesome cycle.

Bibby Financial managing director Australia and New Zealand Mark Cleaver said with so many business people going on holidays, it is important to put systems in place to protect cash flow over Christmas and New Year.

Here are some of his expert tips to get through this period with money still in the bank.

1. Get in line early at the fish market
As you complete work, you’re entitled to charge clients, so invoice clients when work is done rather than wait until the end of the month to send an invoice: Time is money, so act now and get paid sooner. You should also make your payment terms clear. Payment terms are usually set at 30 days; however, it’s perfectly legitimate to set your own terms at 14 days. You’ve done the work or delivered the goods, so you are entitled to payment.

2. Don’t wait until after Christmas to stuff your stocking
Deal with late payers as soon as you become aware that an invoice is overdue. Any accounts receivables system should be structured so that late payers are identified as soon as possible. Remember, a sale isn’t a sale until the cash is in your bank account. So if there is a problem, pick up the phone and demand payment. An invoice is money due to you, not a donation.

3. Make sure your Christmas lights are working
Investing in software can help you streamline your invoicing and receivables management as well as protect your cash flows. There are several excellent solutions available on the market that can automate the invoicing and receivables management functions, so investigate your options. Automation means you can redirect your staff to other functions within your business, such as sales or operations, helping to make you more profitable.

4. Christmas is a time of giving
Over the holiday period, you might consider rewarding early or consistent payers with a small discount on their bill if it won’t harm your business. This is a great way to say thanks and show your appreciation to your loyal customers – and it might well bring in cash sooner than you expect.

5. Don’t hold on to old baubles
If you’re hoarding stock that isn’t likely to sell over Christmas or the New Year and it’s got a use-by date, consider selling it at a discounted price to get it out.

6. Close up shop and head to the beach
There’s no point keeping your business open and incurring costs if you aren’t busy over the Christmas period. Either maintaining a skeleton staff or shutting down over the holiday period can save running costs, as well as keep staff annual leave entitlements in check.