We may not want to be reminded, but Christmas is just around the corner and we need to think about what this means for our cash flow.
Whilst many SMEs will be at their busiest, the holiday period is also a time when cash flow can be at its tightest.
It is worth doing some work now so that your business is in good shape over the festive season.
The 12 days of Christmas Cash Flow:
On the first day of Christmas …
Review when you will be invoicing leading into the holiday period and consider when other businesses will be closing, so you can be paid on time
On the second day of Christmas …
Review which of your customers have a habit of paying late and ensure they are reminded in advance of when payment is due
On the third day of Christmas …
Consider whether you need to refer any unpaid invoices or potential bad debts to a commercial debt collector, so they can work on you being paid before Christmas
On the fourth day of Christmas …
Update your cash flow projections to anticipate any shortfalls
On the fifth day of Christmas …
Consider which customers need to pay you before you supply them further
On the sixth day of Christmas …
January can be challenging so follow up invoices before your customers and their accounts departments go on holiday
On the seventh day of Christmas …
Resolve any disputed invoices now; provide your customers with supporting documentation so that invoices can be approved for payment
On the eighth day of Christmas …
Whilst you are really busy, be sure to follow your credit policy. Having a signed credit application form with ABN for new customers is always recommended
On the ninth day of Christmas …
Review when your suppliers need to be paid and utilise payment terms or ask for a discount for paying early
On the tenth day of Christmas …
Beware of suppliers chasing for payments if they want you to pay to a different bank account or are threatening to stop supply over this period
On the eleventh day of Christmas …
Consider offering a discount or incentive to be paid before the new year
On the twelfth day of Christmas …
Sit back, relax and enjoy the festive season