We don’t normally begin with alarming statistics, but this time we are and then we’ll give you some solutions.
The Australian Bureau of Statistics recently released data that revealed:
- 50% of businesses started in 2019 were permanently closed by June 2023
- In those 4 years (July 2019 – June 2023) 35% of all Australian businesses permanently closed
There are many reasons why businesses shut down and poor cash flow is one of them. The Christmas/holiday period might seem a long way off, but from a business cash flow perspective, it’s critical to start planning now.
Here are our Top 3 Tips for managing your Christmas holiday cash flow and if you would like some help, please get in touch with us.
Tip 1: Understand what happens in your business and industry
Some industries are frantically busy in the lead up to Christmas and over the summer holiday period. Retail is a prime example. If your business is exceptionally busy as part of the end of year rush, you need to be planning your cash flow now to cover things like additional stock or materials, more staff and/or overtime payments.
However, if your industry slows down in the lead up to Christmas, you need to be building cash reserves now to tie you and your business over until things pick up again in the new year.
Tip 2: The earlier you invoice, the faster you’ll be paid
Don’t wait weeks to send invoices to your customers. That immediately extends the time you’ll be waiting to be paid and over summer, it’s likely your customers will be even slower. We strongly recommend you start invoicing your customers weekly. This simple step will absolutely transform your cash flow.
Tip 3: Don’t let embarrassment prevent you from being proactive
It’s common for business owners to feel uncomfortable chasing their customers for payment. So don’t! Instead, program your invoicing software to send payment reminders a day or two before each invoice is due. Then program regular payment reminders if the invoice continues to be unpaid.
Recent research has found automatic invoice reminders reduce average payment times from 40 days to 25 days. That sort of change will make an enormous difference to your business cash flow throughout the year and in particular, in the Christmas lead-up.
There are lots of ways to improve the cash flow of your business
Having good cash flow will reduce your stress levels, lower repayments on business overdrafts and give you the capital to grow your business. If you feel your business cash flow is holding you back or you are concerned about how you will manage your money over the Christmas holiday period, get in touch with us. We are here to support your business to make things easier for you.