Holiday breaks are a time to spend with family, friends & have a chance to recharge for the year ahead. But, for a business owner this time can be stressful without careful cash flow planning. Even if you do continue to operate through the holiday shutdown season, your customers’ financial behavior may not remain the same.

It can be pretty disappointing to work hard all year only to find that once you have paid staff, overheads and creditors, you have little or nothing left in the bank to cover your own time off. The budget and forecasting process ensures you know your numbers and are prepared.

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

Staff leave needs to be covered in addition to your normal fixed overheads like rent, creditors and tax compliance. If you are closed over the period, 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 – confirm with staff, customers and suppliers so that you can motivate customers to order early.
• Budget and plan for annual leave – pay rates may be higher than standard ordinary hourly rates, also factor in statutory public holidays.
• Decide on a leave payment strategy – will you pay out leave at the beginning of the Christmas break in full, or continue to pay as usual throughout the break?
• Review your work in progress (WIP) – plan to complete jobs or services that can be invoiced and paid before Christmas (remember if you don’t invoice and collect payment before Christmas, your clients are likely to go on break as well and you may not see the money until mid to late January).
• Put together a capacity plan – depending on the type of goods and services you deliver, there is generally a rush to get everything done before Christmas, whether it’s the kitchen bench-top installed or the beauty treatment before the break.
• Stock-take – Do you need to order in goods now to be able to complete work in progress? Check that there is stock on hand available now to see you through.
• Making an arrangement with the Tax Office – if you find you can not make payments, it is possible to apply for a payment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. Talk to us, we can help.

Need financial support?

If you can’t 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.