Simple steps to manage your business cashflow at Christmas

With the festive season just around the corner as a gift to you, we want to help you manage your business cashflow at Christmas!

We understand that there can be a dread that comes with the festive season every year. Increased spending, planning gifts for staff, additional annual leave, your Christmas party plus all the additional expenses that seem to pop up.

Spending some quality time planning your small business finances before the busy season starts can help make sure your business (and cashflow) runs smoothly through the Christmas period.

Why is managing my cashflow at Christmas important?

When Christmas arrives, the annual seasonal cashflow can become stagnate for small businesses in Australia, as we all tend to slow down during the summer break.

Clients and business owners alike may not be prioritising their invoices. People tend to take their time making payments during this season, as their accounts payable runs are fewer.

Depending on your industry, cashflow problems can be caused by several factors. Hospitality and retail industries may see an influx of business while other industries may see a quiet season and a loss in profit due to shutdown periods.

On top of this, you need to be aware of staff holidays, public holidays and wage costs that can arise. Therefore, preparing ahead for this season is best option for your small business.  

Preparing for the Christmas season without blowing your budget

Our main tip to prepare for this Christmas season is to forecast your cashflow. Plan ahead for a decrease in cashflow by setting a budget for this period of time.

You should begin by planning for all additional expenses which may occur during the Christmas period. This includes Christmas parties, holiday pay and bonuses which all need to be accounted for before the celebrations can begin.

Make sure you are monitoring your cashflow accurately using your accounting software which can help you budget any additional costs. If you’re a business affected by seasonal cashflow, you may find Xero’s tips for small businesses highly valuable.

Our tips to manage your Christmas cashflow

Now you’ve begun planning your budget, you can implement the following tips to keep on top of your Christmas cashflow:  

Be mindful of invoices

Clients may be delayed in making payments during the Christmas season. To mitigate this issue, be sure to stay on top your invoicing and allow a substantial amount of time for your clients.

Make sure that your payments terms and deadlines are clear. This is not only beneficial to your business but also for your clients.

Providing this clarity helps those speed up the process by making sure you are spending less time chasing up late payments and more time running your business.

Manage your savings

If you have put in the work, you should be prepared for a period of quiet time. As an extra safety measure, it’s important you have set aside some savings for your business.

That way, if you require some additional funds after the Christmas period, you have it available. If not, you can invest it back into your business!

Review your potential benefits during the Christmas period

Wondering if your Christmas Party is a fringe benefit? It depends. We break down what can be claimed as a fringe benefit in our blog, and whether or not your Christmas Party counts.

Spend this time wisely

During of the slow Christmas period, you can use the time to grow and develop your business. Wait for the appropriate time to implement repairs or major renovations and focus on building up your revenue.  Begin planning your business goals and strategy for the fiscal year. We also recommend developing or reviewing your 2023 budget to be financially prepared for the new year.

Or, you can simply take this time to complete tasks that you have put aside in busier times of the year. These might include developing your social media pages, going through your inventory, working on your website, or researching your competitors.

Christmas can be an incredibly stressful time, but it doesn’t have to be. Invest in a team to take the stress out of your businesses cashflow this Christmas.