The holiday season is almost here, and your small business is ramping up to sell more than it has all year. Your orders are piling up and your staff is working hard to get shipments out to customers.
At this time of year, many small businesses want to celebrate their achievements with staff and customers by giving bonuses and gifts and holding parties. However, there might be a problem, where do you find the money to support all of this? You have a good balance of accounts receivable arriving in the New Year, but you need a better cash flow now. Here are a few tips to ensure that your cash flow runs smoothly over the holiday season.
- Make sure that your bookkeeping is taken care of and accurate. This will provide an analysis of your profit and loss and cash flow and your current debt position. Maybe it is time to hire a bookkeeper to keep you on top of these tasks and reduce the headaches?
- Develop and implement good collection plans and make sure your staff is trained to collect payments on time while still maintaining a good relationship with your customers. Offer easy payment options to your customers giving them the ability to pay on-line or over the telephone. Giving a discount for early payment can encourage your customers to pay their bills quicker.
- Take advantage of short-term lending – Waiting for late paying customers to settle their bills, buying new inventory, paying your employees or throwing that holiday celebration can strain your cash flow so you need to find short term funding that allows you to access cash immediately. You could use your savings, credit cards, or line of credit. Another option is obtaining short term invoice financing for instant capital until you receive payments.
- Delay Payments – work with your suppliers to extend your payment terms. The later you pay them, the more cash you will have on hand. Another option is to delay your holiday party until the new year when you can still celebrate your achievements and the support of your staff and clients.
- Use your previous holiday season experience to gauge how much you are going to sell of a product this year and even when to run a sale. Use a business analytics program to give you important information about your business to help you to increase profitability.
- Ensure that your team is well-equipped and prepared for the busy season ahead. If you need to improve your customer service and nurture more sales hire a few part-time or temporary staff to help you.
Making these preparations to face the holiday season will help to make your busiest time of the year run a lot smoother and be more profitable.