Considering cashflow is critical in the lead-up to Christmas

If you’re running a small-to-medium-sized business, it’s essential in the lead up to the Christmas break to organise your projected cashflow. It’s also time you consider how your business is tracking as you head into a new quarter.

So, what are some of the things you should be doing? First, it’s a necessity to start forecasting cashflow over the holiday period; this will help you maintain all funds coming in and out of your business, therefore, allowing you to have better control during the slower months. Doing so will help you determine what funds will be left over, and in turn where that money can be reassigned.

Before forecasting for cashflow, make sure your accounting software is up to date, so you have an accurate picture of your business. Having a better understanding of your finances will provide you with an accurate final cashflow figure thus, allowing you to pre-plan for the rest of the year.

So what’s next? Planning for unexpected costs is an absolute must. During this period there are always going to be hidden costs and the odd expense that creeps up. Having a plan in place to manage these hidden costs is prudent to your business’ survival. One way this can be addressed is looking into your businesses operating hours during the Christmas break and ensuring your staffing levels are correct for the slower periods. Try to minimise how much time you take off during this period, this will ultimately help your business stay afloat during the holidays. But don’t forget to have some time off yourself if you’re a business owner, you need to recharge for 2019!

Next, we need to evaluate. Evaluate your current debtors before the year is up. Essentially this means collecting all the money owed to the business before your clients go on break. This will enable you to better forecast and plan for the coming months leading into the new year. Christmas and holiday periods are a notoriously difficult time to get debtors to pay their invoices and you want to avoid spending too many hours a week chasing up some of the slacker ones. One way to tackle this problem is moving your clients to a direct debit system which ensures all payments will be made on time.

Lastly, getting ready for BAS time. January can be a time of year when a lot of small businesses can get themselves into trouble with their ATO compliance and payments. Ensure your business accounts are reconciled and your BAS reviewed early in the month, so you can plan for this payment. Lodging your BAS on time helps with the overall cashflow management of your business. This process involves paying the GST and PAYG owed to the ATO, which in turn help you determine your total available cashflow at the end of the quarter.

These are just some of the fundamental cashflow “must dos” your business needs to look into, in the lead up to the Christmas break. So, is your business ready?

Brooke Arnott, Managing Director, The Small Business Lounge

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