Deck the halls – small retailers prepare for Christmas

It seems like Christmas comes earlier every year. Even in mid-October, the halls are already decorated, the tinsel is out, and the carols are blaring incessantly through the shopping centre speakers. But even before kids begin to prepare their wish lists, inside the offices of 130,000 small retailers around Australia, lists forecasting cashflow and supplies are being made, checked and double-checked.

Months before the big day, preparation has begun for the holiday season.

“Christmas is absolutely ridiculous,” says Pippa Oostergetel, founder of Squeak, a retail business specialising in digitally printed scarves.

“I’ll spend all of January recovering, just getting some sleep.”

Christmas is the biggest time of year for Oostergetel. Some years, she says, November and December sales can make up half of her annual revenue. Like all small-business owners, she plans ahead where she can. However, knowing what to plan, and how to ensure that planning is accurate isn’t always easy.

“Small businesses need to have their books in order for Christmas,” says Charles Klvana, Managing Director at Perth bookkeeping practice Eye on the Books.

“They need to use up-to-date financial data, look at how they travelled last year, and budget based on sales in previous years and what they’re expecting this year.”

Kelly Jamieson, Founder and Managing Director of gift service Edible Blooms, says that this time of year brings the added stress of making sure she has enough casual staff available on call to keep things moving, as well as ensuring there’s enough stock on hand.

“We start preparing for Christmas in the middle of the year,” Jamieson says. “Normally, across Australia and New Zealand, we deliver an edible bloom every two minutes. At Christmas, it’s every twenty seconds. We’re Christmas experts by now.”

The latest Xero Small Business Insights report shows that both online and physical small retailers are in good shape for Christmas 2017. Over the past several years, the number of smaller retailers with positive cashflow has ticked upwards as businesses bring in more cash than they spend. A total of 61.1 per cent of retailers were in the black as of Christmas 2016, far above the 54.6 per cent of all Australian small businesses, a sign of retailers’ relative financial health compared to the rest of the economy.

Some 36.5 per cent of invoices paid to small business during December 2016 were overdue, a slight rise year-on-year, showing the impact large businesses continue to have on the cashflow of smaller ones. However, late payments have dropped significantly across the board during 2017, as large businesses begin to settle outstanding invoices with small business suppliers far more quickly.

Thankfully, the healthy signs for retailers are expected to persist in 2017, with fewer invoice payments being overdue as compared to previous years.

“Retailers are increasingly less financially stressed this year, which would align with the view that the small retail sector is improving as the mining downturn recedes,” says Bernard Salt, KPMG Special Advisor.

“If this is indeed the case, then the proportion of invoices paid in December in this sector this year should approach the 62 per cent mark.”

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