Christmas is a joyous time of year and a time for holidays in Australia! That being said, it is also a time when businesses often face cash flow challenges, writes business advisor Brad Turville.

These can be due to needing to stock up on inventory before the Christmas rush, discounting, team members taking annual leave, a string of public holidays, additional opening hours (or closing for some!), and recruiting and managing casual staff.

On top of that, most owners hope to pencil in a holiday!

7 ways to stay on top of Christmas cash flow

Here are seven wise ways to stay on top of business cash flow over the festive season:

1. Get in early

First, review and proactively follow up on all your outstanding debtors (i.e. customers and clients who owe you money). Once school holidays start and people go into holiday mode, there is little chance you’ll get your invoice paid until the New Year, so get onto it now!

2. Watch your payment timings

Don’t pay your suppliers too quickly. If your supplier gives you 30 days to pay their account, then take the 30 days. If you have vital relationships with suppliers, communicate with them and ask for more favourable trading terms over the period.

3. Minimise expenditure

Don’t be spontaneous and buy any significant unplanned assets; remember to minimise expenditure where possible to preserve as much cash flow as possible.

This isn’t the time to spend just because there’s cash in the bank. That said, in your business, it might make sense to load up on inventory, team and marketing – work with your advisors to get clear on this strategy and budget allocations.

4. Crunch your numbers

Pre-determine your pricing structure and forecast the effects on your bottom line. It’s incredible how many businesses price products or services that make that service line unprofitable to the business.

Make sure you crunch your numbers. And remember, discounting can be a real profit killer.

5. Get set with staff

Forecast any additional staffing requirements. This is not only from a capacity point of view to ensure your service, product, shop or restaurant has enough support, but also to allow for a spike in wages and entitlements over the holiday period.

6. Streamline procedures

Casual staff come and go, so ensure you have efficient and compliant procedures to facilitate this process. I recommend a tool like MyHR.

7. Communicate!

If you, as the owner/manager, are planning on taking some time off, plan and communicate with your team. Who will take responsibility and captain the ship while you’re gone? Do they have the ability to pay the bills? Manage HR?

This ultimately comes down to your policies and procedures, so consider reviewing them now (or start creating them if they don’t exist). Many of these managerial tasks are repetitive and can be systemised, so why not take them out of your head and put them down on paper?

Start planning now, get clarity on the expected team, wage, sales, margin and cash flow scenarios, and manage accordingly. Work with your advisors; they can clarify future numbers, and you can make better business decisions in line with this.

Oh, and remember to enjoy your Christmas!

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Now read this:

https://www.kochiesbusinessbuilders.com.au/five-tactics-to-keep-cash-flow-strong-in-a-slow-market/