Christmas is a time when many businesses must manage their cash. For some businesses, especially those in retail, this is a time when they will see an increase in their sales. For others this is when they start to see a slow down.

Slow Down In Cash

If your business is one that traditionally starts to see a slow down in cash during the Christmas period, here are some tips to manage you through this period.

1. Overdue Accounts- Follow up on these immediately. Start calling clients whose accounts are overdue. Its important to maintain a good relationship with clients. This includes good communication so they understand your payment terms.

2.  Cash Reserves- Start putting money aside to pay accounts that will fall due during the period. Keeping your suppliers happy ensures you maintain a good relationship with them.

3. Payment Plans- With both clients and suppliers, you may need to enter into a payment plan with them. This should be organised as early as possible so terms can be agreed to before it becomes an issue.

Increase in Cash

Your business may see an increase in sales during this period. This is commonly seen in retail and tourism where the Christmas holidays account for a third of their yearly sales. Here are some tips to manage for when you receive most of your income in this period.

1. Accounts Payable- Stick to your accounts payable payment terms during this period. If you receive a discount for early payment, consider if this is advantageous to your business.

2. Cash Reserves- Ensure you put away cash for those periods when sales are a little slow. Look at where you can earn interest on this cash.

3. Cash flow Projections- Be aware of when you think you are going to need to draw down on your cash or take out a bank overdraft. Preparing cash flow projections is an important part of understanding when you will need to do this.

Is your business experiencing problems with customer payments? Do you have problems managing how to pay your suppliers on time? Do you need assistance with budgeting and financial management? Contact Damien Foley to organise an appointment to discuss your situation.

~ Damien Foley