The holiday cash flow planning poses challenges for small businesses during this time of the year.
Even when you're away from the workplace, ongoing expenses and payroll obligations still require attention.
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When taking time off could result in reduced cash inflow, it's crucial to proactively plan for this period to ensure sufficient coverage for ongoing costs. Gain a comprehensive understanding of your payroll and any planned expenses requiring consideration.
If there's even a potential for a shortfall, address it directly. Whether it involves negotiating arrangements with suppliers or creditors or making compromises on other business expenditures, creating a plan is essential to safeguard both the business and your staff from any adverse impacts.
When planning for your holiday cash flow, schedule a consultation with our Bookkeeping experts at Acro Accounting & Financial Planning. We specialize in guiding you through the holiday period, alleviating cash flow concerns, and ensuring you can enjoy a well-deserved break.
Tips to a smooth holiday cash flow planning
Invoice early – issue all eligible invoices and in advance if possible. If you have regular clients or customers you could offer a retainer or a deal if they book services or make a purchase from you in advance.
Chase payment – use this opportunity to chase up any outstanding invoices. Strong communication and relationships matter.
Talk to suppliers – a little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.
Review your expenses – it’s always a good idea to do a regular review of expenses. Business costs can creep up, and you might be able to make savings by pausing or cutting regular payments and subscriptions and upcoming expenses.
Talk to your bank or the ATO – if cashflow is tight, make sure you have conversations early so you have everything in place to see you through.
Have you got a strategy for your holiday cash flow planning?
Anticipating a break from work, enjoying warmer weather, and setting up that long-awaited out-of-office email is a shared delight. However, for business owners, this period can induce stress without meticulous holiday cash flow planning.
Even if your small business remains operational during the holiday season, the financial behaviors of your customers may undergo changes. Explore the following general tips and strategies to navigate through this potentially challenging period.
For tailored advice, our small business bookkeeping and accounting experts can assist you in budgeting and preparing a holiday cash flow forecast. Additionally, we can manage your financial operations while you take a well-deserved break. If needed, we can also support you in applying for short-term finance to help you through this time.
Easy Strategies for Holiday Cash Flow Planning For Small Business
Even when your business is closed for the holidays, your expenses don't go on vacation! Addressing staff leave and handling regular fixed overheads such as rent, creditors, and tax compliance becomes crucial. If you're temporarily shutting down, revenue generation takes a pause, and restarting sales in the new year might involve a ramp-up period.
This underscores the significance of the budget and forecasting process aka holiday cash flow planning. It serves as a vital tool to ensure that you are well-acquainted with your financial figures and adequately prepared for the financial aspects of the holiday closure.
- Establish your holiday break dates and confirm them with your team, customers, and suppliers.
- Include provisions in your budget for annual leave, considering the potential need for temporary staff. Additionally, determine whether you'll pay out leave in full at the start of the break or continue regular payments throughout the period.
- Evaluate your work in progress (WIP) and strategize to finalize jobs or services that can be invoiced and paid. Keep in mind that delaying invoicing until after the break might result in a payment delay of another month.
- Ensure effective capacity planning, as there's typically a rush to complete tasks before the summer holidays. Make certain that you have the capability to capitalize on this busy period.
- Conduct a stocktake —consider ordering necessary goods now to fulfill ongoing work. Verify the availability of stock on hand.
- Establish an arrangement with the Tax Office; it's possible to request additional time for payment or alternative arrangements.
We can help you navigate the holiday period and help you alleviate cash flow worries. So you get a well deserved break.
When you’re planning for a break, book an appointment with us.