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A COVID Christmas – Cash Flow Planning

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For business, there are many things to sort out before Christmas and ensuring there are sufficient funds in the bank is critical to having peace of mind over the holidays, and enjoying our break.

It’s a challenge all businesses face, staff and expenses still need to be paid, whether businesses are trading or not and Government support is reducing.

Unless the holiday season is when you have your peak sales, it’s the time of year when sales are lower, customers aren’t open to be able to pay outstanding invoices, and cash flow can be tight until beyond February 2021.

Planning and budgeting for your cash flow during this period is highly recommended. By understanding what your cash flow will look like now, you can be proactive in seeking to make up any expected shortfalls in advance.

A COVID Christmas Cash Flow Checklist

Here’s a checklist which may be useful to run through during your planning process:

  1. Calculate Anticipated Government Support into the New Year: work out JobKeeper, Cashflow Boost, State Government Support payments, Local Government Grants, Payroll Tax rebates, Rent referrals and so on.
  2. Follow Up Outstanding Invoices: It takes time to have invoices authorised and paid, so the sooner you start following up on unpaid invoices, the better. If you can get a commitment to pay, great. For all those customers who are usually slow to pay, send them advance reminders of when payment is due.
  3. Ensure Invoice Queries Are Resolved & Completed Orders Are Invoiced Promptly: The sooner invoices can be authorised, the sooner they will be paid. When are you invoicing in December? Do you need to revise this based on when your customers are closing for Christmas this year?
  4. Make It Easy for Customers to Pay: Have all payment options on the face of your invoices and think about what an early settlement discount could do for your cash flow if you offered it for payment before Christmas.
  5. Carry out Your Normal Due Diligence: Take care with new customers, or existing customers who are over their credit limit. It’s a busy time leading up to Christmas, and important to follow your normal procedures whilst getting excited about new sales. In some circumstances, would it be appropriate to ask for some payment upfront, or shorten your payment terms?
  6. Lastly, Don’t Forget Your Creditors: Stay in touch, and if you are not able to pay on time, be open about it early. You want to keep your suppliers happy and make sure your relationships are intact, so the earlier you get in touch and work with them, the better for the management of their cash flow also.

 

If you can pay early, you may be able to negotiate an early settlement discount.

We Can Help

If you need a hand chasing up unpaid accounts, send them to us as soon as you can, so we can work on them with plenty of time before Christmas.

We have been working right though shutdowns and restrictions and collecting many debts. Our full resources are available and working to support our clients leading up to the holidays. Let’s follow up those slow payers before they shut down for Christmas!

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