Nine Ways to Manage Cash Flow During the Holiday Season

It amazes me how business owners don’t appear to learn from previous Christmas times and ensure that they always have solid cash flow during this period.

Use the below to assist you to manage your cash flow wisely this holiday season.

1. Forecast and Budget

There is only one thing worse than experiencing poor cash flow and that is not knowing when you are going to have poor cash flow. It is important to have a forecast in place that can tell you what your expected bank balance will be at any date in the next 30 to 60 days. Map out your expected inflows from work based on completion, invoicing, and payment. You may wish to look at previous years’ financial data during these months to understand trends. Identify your fixed costs (rent, salaries, utilities) and variable costs (materials, subcontractor fees). Consider potential income dips and increased expenses, such as holiday bonuses or seasonal marketing.

2. Invoice Promptly and Follow Up

Ensure that all work done before the holiday period is invoiced promptly. Delayed billing leads to delayed payments. Ask for payment on completion where possible. Also, be proactive in following up on outstanding invoices.

3. Manage Inventory Efficiently

For businesses that rely on inventory, efficient inventory management is crucial. If you are shutting your business for a period, be careful not to overstock, as this ties up cash. If you are operating for most days over the break plan your purchases wisely to avoid unnecessary expenditure.

4. Control Expenditures

Communicate with your team to ensure that only essential purchases are made over the next few weeks. Postpone non-essential purchases or investments until your cash flow stabilises. Evaluate every expense to ensure it’s necessary and aligns with your cash flow plan.