Holidays are meant to be a time to spend with family, friends and have a chance to recharge for the year ahead. Unfortunately, for business owners, it can often be stressful without careful cash-flow planning. Even if you operate throughout the holiday season, your customer’s financial behavior may not remain the same.

It can be rather disappointing when you work hard all year only to find once you have paid your employees, overheads and creditors, there is little or nothing left in the bank to cover your own time off. Budget and forecasting allows you to be prepared and know your numbers.

Why is cash-flow planning important at this time of the year?

Employees’ leave needs to be covered in addition to your normal fixed overheads like rent, creditors and tax compliance. If you are closed over the holiday season, you will not be selling and your sales may take time to get started again in the new year.

Here are some simple strategies that can help:

  • Decide your Christmas and holiday break dates:

Confirming with your employees, customers and suppliers when you will be closed so you can motivate customers to order early.

  • Budget and plan for annual leave:

Ensure you are aware if your pay rates will be higher than standard ordinary hourly rates and factor in public holidays.

  • Decide on a leave payment strategy:

Decide if you will pay out leave at the beginning of the holiday season in full, or continue to pay as usual through the break.

  • Review your work in progress (WIP):

Plan on completing jobs or services so that they can be invoiced and paid before the holiday season (remember if you do not invoice and collect payment before the holiday season, your clients are likely to go on break as well and you might not get paid until mid to late January).

  • Put together a capacity plan:

Depending on the type of goods or services you provide, there is generally a rush to get everything done before Christmas, whether it is the installation of the kitchen bench-top or the beauty treatment for the break.

  • Stock-take:

Ensure you review your stock to ensure you have ordered any goods now to be able to complete your work in progress.

  • Make arrangements with the ATO:

If you find you will not be able to make payments during this period, it could be possible to apply for a payment arrangement. There are costs associated with this, however it could provide a solution to help you through the holiday season if it looks like you will be cash poor. Talk to us, we can help.

 

Need financial support?

If you are struggling to make ends meet, now is the time to organise short term financial relief like an arranged overdraft of loan, rather than hoping it will come right.

Get in touch for help with cash-flow forecasting or assistance in applying for short-term finance to get you through the break.