Christmas should be all about enjoying a relaxing time with friends and family – the last thing you need is to spend the festive period worrying about whether your business will survive the New Year!
Many businesses discover their income slows over the festive season, but remember, that doesn’t mean your outgoings will come to a halt. Make sure you are prepared for all your regular payments, such as payroll and rent. It is easy to get ahead of ourselves with opportunities the New Year holds, but be careful to cover your daily payments first.
Depending on your sector, Christmas could be a busy time of year, or on the other hand, you could shut down for a number of weeks. Either way, you will usually be awaiting unpaid invoices, or have ordered and paid suppliers before your sales are made – this is where problems arise and issues need to be overcome quickly to avoid bills piling up.
It’s time to get savvy and avoid putting your business in imminent danger. There are some basic rules to keeping on top of your cash flow, but over the festive season, not sticking to them could be the make or break of your business. These rules should be nothing new, but we have found it is simply about being persistent, sticking to the basics and making sure you are prepared!
Simple steps to follow before the festive season hits:
- Budgeting:Firstly, forecast your cash needs. Get a clear idea using realistic information – facts, figures and historical evidence are key to avoiding unrealistic budgets that your business can’t stick to.
- Set strict payment policies:Many businesses are generous when they first start out, with no penalties for late payments. We believe that setting timely policies from the word go will show your customers that you mean business and makes sure they understand there will be consequences. The results of not doing this will mean having to offer early ‘Christmas payment discounts’ and other bonus’s to make sure you are paid on time and even then, there are no guarantees.
- Bill quickly:The quicker you work on your end, the quicker you should receive payment – it pays to keep on top of every invoice.
- Avoid impulse buys:Stick to necessities and don’t leave money in unnecessary stock – take regular stock takes and keep on top of products, cash locked up in stock could be put to good use.
Release your cash tied up in unpaid invoices
Even the most pro-active businesses can still struggle with cash flow, especially around the holidays. But this doesn’t mean you have to wait until you are forced to come up with a solution. Being prepared is a huge part of the battle. There are many alternative cash flow solutions, including factoring, which can release your tied up cash for very little cost.
New Year, fresh start
Wouldn’t you love to start the year as you mean to go on? With all the cash you’ve worked so hard for in hand, books up to date and nothing owed.
The Christmas break offers you time to reflect on your business goals. With all the motivation the New Year brings, it’s the perfect opportunity to assess how your previous year has gone, look at the results, review your cash flow and decide on your aims for the future. If you’re planning an expansion or to branch out the business, now is the time to discuss whether it is financially plausible.
How to avoid the inevitable
Be ahead of the game – issue invoices on time, make sure you have all reminders set before it gets too late and organise notifications for overdue invoices.
Remember, it is still not 100% guaranteed your invoices will be paid on time, even if you send notifications and charge for overdue payments. It is more a case of factoring these elements into your prediction and to have a buffer prepared for the circumstances. If you are already doing everything you can, but struggle with meeting payments on time due to tied up cash, factoring could be an option for your business. Having money locked up in unpaid invoices can lower the value of your company and prevent future growth and development.
Why use Key Factors?
Key Factors have been industry leaders for 26 years, offering expertise and reliable cash flow solutions. Plus, with no hidden fees and no minimum volume, you can use us if and when you need to.
Unlike many of our competitors, we are looking out for our clients, offering fast approval and no ongoing monthly or annual charges. We focus on simple, flexible alternative cash flow solutions so that you can focus on spending the holidays enjoying yourself, awaiting the New Year without worry.
We want your business to have the ability to meet it’s true potential all year round.
With over 30 years of experience and offices in Sydney, Melbourne, and Perth, your business is in safe hands.
Call 1300 884 100 today to find out more.