Boosting your Christmas cash flow is a hot topic for small businesses right now. If you dread the festive season purely because it brings serious cash flow problems, here are some tips from our bookkeeping and finance experts.

Review your cash flow and forecast now

Make sure you understand your seasonal cash flow patterns ahead of time. This will ensure you don’t run out of cash during December and January. Plan for the decrease in cash by putting a monthly budget in place and trying to cut expenses where you can. Ask yourself when are your largest expenses going to fall due. How much cash is likely to come in and when? When will you be paid if debtors go on holiday before paying their bills?

Once you have this information, you can estimate how much cash you require. Keep in mind that BAS lodgements and other ATO obligations are due in February so this will affect your Christmas cash flow.

Be smart about your inventory

If you struggle with inventory management, we can help. Our bookkeeping team will work with you to set up a system that tracks your stocks accurately in real-time. It will be easier staying on top of what products are selling and how much stock you need to purchase.

Christmas is a busy time for many businesses, which means that you need to be smart when ordering your stock. There’s a fine line between ordering too much or not enough stock so make sure you’re keeping an eye on your stock levels and only re-ordering when necessary.

Improve your accounts receivable

A great way to boost your Christmas cash flow is by improving your accounts receivable process. This means being on top of unpaid invoices and chasing up with those customers. Try to send invoices to your clients as early as possible to ensure you’re being paid before they go on holiday.

Be proactive about chasing payments. Don’t wait until the week of Christmas to alert debtors of late payments. A bookkeeper can integrate programs such as Chaser into your business systems, that send gentle reminders to customers about their outstanding invoices.

Create a Christmas marketing strategy

It should come as no surprise that the festive period can greatly affect a consumer’s buying decisions. Build a strategy around the holiday season that gets your customers excited to shop with you. Think about personalisation, customer loyalty, discounts and promotions with a clear end date as that will encourage consumers to act quickly. Doing this will entice customers to make a purchase and in turn, improve your cash flow for the holiday season.

Postpone big expenses

Now is not the time to be buying new office furniture or signing a lease on a bigger space. If it’s not critical to sales and operations during the Christmas season, postpone big expenses until after the New Year. You can also look at small business loans if there are things your business needs, but you have no cash for.

Financing activities to boost Christmas cash flow

If you’re needing access to capital for Christmas, consider taking out a short-term business loan or turning unpaid sales invoices into cash through debtor finance.

Business loans

Small business loans can be a great way to get the cash you need when you need it. Some other benefits include:

  • Lump sum of $5,000 to $500,000
  • Terms from three to 36 months
  • Cash flow friendly repayments
  • No asset security is required up front to access up to $150,000.
  • Minimal documentation requirement for funds under $250,000, and
  • 4 weeks no repayments as a standard option (interest will accrue from the settlement date to the end of the term).

Business loans don’t have to be painful. A business loan can be used to refinance an existing loan, hire extra staff or purchase more inventory. Our finance brokers can help you get the best deals and can provide advice about how to correctly manage your cash flow.

Invoice financing (debtor finance)

Another option for small businesses is invoice financing, also known as debtor finance. An invoice finance plan allows you to take a well-earned break without worrying about your business profitability. This type of finance uses invoices as a way for businesses to access tied-up cash. This is done by securing a loan against your outstanding accounts receivable to a lender who will advance a portion of the funds.

Unlike traditional bank overdrafts, with invoice financing, there’s no property security required, and you can access up to 95% of your total invoice value. If you’re needing to boost your cash flow quickly, consider invoice financing. It usually takes less than 24 hours to get approval and receive the funding. The sooner you apply, the faster your application will be processed and funds transferred to your account so make sure you’re engaging with a finance broker as soon as possible.

Improve your Christmas cash flow with the help of Carbon’s Bookkeeping & CFO Services and Finance & Lending teams

Our bookkeepers and finance brokers will work together to help you improve your cash flow on all levels.

Our Bookkeeping & CFO Services team can help you correctly manage your cash flow by doing a cash flow analysis to understand what your needs are and how we can implement new strategies to make sure you have adequate funds come Christmas time.

If you’re needing a business loan or want to learn more about invoice financing, speak to our expert finance brokers today. Our team can identify what loan is best suited to your cash flow needs and can help with the application process. Get in touch with us today.