Advivo Partner, Dale Edwards, shares some great tips to ensure that Cashflow isn’t a headache over the Christmas period.
With the Australian tradition of being ‘off’ for much of January and then Super due late January with BAS rolling on at the end of February, it is easy to be left with a big ‘business Christmas hangover’ when it comes to cashflow. That is why it is important to plan ahead and forecast anticipated cash flows – not just for a few weeks over Christmas but for December, January, and February.
The first step is to prepare this forecast so that you can establish if there will be a problem and have time to formulate and implement a solution.
If you discover that there could well be a shortfall in available cash, what could some solutions be?
- Sourcing some short-term finance
- Follow up your debtors – not always the most pleasant task but if you aren’t doing this it’s easy for them to ‘forget’ to pay you when you need it most. You should already have automated reminders being sent out, so this step really means picking up the phone.
- Inducements for customers paying sooner (not necessarily discounts but perhaps bonus services or stock next year).
- Review of costs to establish if any can be postponed until the new year or reduced.
And here’s a tip to give yourself a more relaxing break without needing to jump in and do work whilst your business is closed
Did you know that if you use modern software, such as Xero, it is possible to schedule creditor runs and pay runs, and upload these to your internet banking well in advance, all authorised and ready for you. These will then just happen on the scheduled dates with no need for you to have to jump onto the computer when you’d rather be at the beach or watching the Boxing Day Test. Of course, this will only work if you can be sure in advance that the funds are there to cover these payments in advance. This is why investing the energy before Christmas to get on top of cashflow is so worthwhile.
Whatever you decide, if you need help setting up Xero for any of the above, get in touch. Also, if you have some time over the break to consider your plans for 2023, here is a FREE 12-Month Business Planning Template to help you start creating a plan that will set up 2023 for success.