Managing your cash flow during busy and quiet times

Many small businesses – regardless of industry – find it harder to juggle cash flow during holiday periods. Christmas holidays may be your quietest time, especially if your business closes and customers are all on holiday. Or, maybe it’s your busy period and you need to manage stock, staff and cash flow. The key to making sure your business runs smoothly during this period is forward planning. Do you plan to succeed or fail to plan?

Here are some simple things to think about to help you plan ahead.

1) Look at historical customer and stock trends

If you are going to be super busy do you have enough stock and will you be able to access more stock if you sell out? Do you have excess stock on hand pre-Xmas that needs to be moved earlier at a discounted rate to make way for new stock? Make sure you have a plan in place to manage stock levels.

2) Forecast your cash flow

If you are going to be quiet and close down during the Christmas period make sure you plan for the decrease in cash in advance. It is a good idea is to set up a forecast cash flow budget at the beginning of each financial year. This is a living document so you can update the budget for the quiet periods when you will have little or no cash flow.

Download our simple cash flow template to assist with your forecasting.

3) Invoice earlier than normal and put a plan in place to manage late payments

A general rule for good cash flow management is ensuring your invoices are sent to customers as early as possible. The sooner you invoice customers in December the sooner you will be paid.

Another great way to maintain cash flow is to set up automatic invoice reminders. This is a great way to gently remind customers about your payment terms and to get the payment made in time. 

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4) Manage staff leave well in advance

Ask staff or contractors to advise you well in advance so you can plan for all payroll requirements. This is a great way to see what staff you will have working and if you need to hire more staff if needed.

5) Plan for tax time

Whilst you need to manage the holiday period you also need to make sure you have enough funds to pay your tax obligations when they are due. This is another example of when a cash flow forecast is a great idea.

The key is making sure you have a plan not just for the holiday period but for the year ahead.

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