smart kittens cash flow a stress-free holiday

Managing Your Cash Flow for a Stress Free Holiday Season

With everything that’s happened this year, Christmas break is welcomed by most people. It’s a chance to spend time with family and friends. It’s also a good opportunity to recharge for the year ahead. But for a small business owner, this joyous time can be stressful without careful cash flow planning. It can be pretty disappointing to work hard all year only to find that once you have paid your expenses, staff, and creditors, you have little or nothing left in the bank to cover your own time off. As Christmas is fast approaching, we have some tips on managing your cash flow for a stress-free holiday period.

Why is cash flow planning ahead of holiday season important?

Your business has fixed expenses like rent, subscriptions, creditors, and tax compliance. If you have staff members, you also need to cover for staff leave. If you are closed over the holiday period, you will not be selling and your sales may take time to get started again in the new year.

The budget and forecasting process ensures you know your numbers and are prepared.

Here are some simple strategies to help:

1. Plan your holiday break dates

Confirm with customers, staff and suppliers so you can motivate customers to order early.

2. Budget and plan for annual leave

If you have staff members, check the holiday pay rates, as it may be higher than standard ordinary hourly rates. Check out the Fairwork Ombudsman website to find your award. You also need to factor in statutory public holidays.

3. Create your leave payment strategy

Will you pay out leave at the beginning of the Christmas break in full, or continue to pay as usual throughout the break?

4. Review your work in progress (WIP)

Plan to complete jobs or services that you can invoice and get paid before Christmas. Remember, if you don’t invoice and collect payment before Christmas, your clients are likely to go on break as well and you may not receive the money until mid to late January.

5. Plan your capacity

Regardless of the goods and services you deliver, there is usually a rush to get everything done before Christmas, whether it’s the new marketing plan or the kitchen renovation before the break.

6. Stock-take

Do you need to order in goods now to complete work in progress? Check that there is stock on hand available now to see you through.

7. Review your Expenses

It’s a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments, subscriptions, and upcoming costs. It might be a good time to cut or find an alternative approach to expenses not related to your core product or service.

8. Talk to the bank or arrange payments with the ATO

If cash flow is tight, make sure you have conversations early so you have everything in place to see you through. Now is the time to organise short term financial relief like an arranged overdraft of loan, rather than hoping it will come right. If you find you cannot make payments for your tax, it is possible to apply for a payment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. Talk to us, we can help.

Need to plan your cash flow to get through this holiday period?

If you’d like to get in control of your cash flow management and funding needs, we’re here to help. Get in touch, we can help you crunch those cash flow numbers, so you can have a stress-free holiday and ready for the new year.

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