Top tips for managing your cash flow-ho-ho over the festive period

Christmas and cash flow don’t tend to go hand in hand. 

With the festive season upon us, many businesses are preparing to close their offices over the holidays and, for small businesses in particular, closing up shop for two weeks can mean a serious issue for cash flow.

Not only will they be paying wages to staff who may be away on holidays, as well as keeping up with other fixed costs like credit repayments or rent, there’s the added risk of some suppliers not processing payment until the new year. According to Xero, one of the UKs leading accounting software providers, 52% of invoices are paid late. 

So how do you get around this? Planning and forecasting your expenses is the answer. One of the most important things to track is your cash flow.

Monitor your Cash flow

With the advent of Cloud technology, cash flow forecasting tools like Float have made financial forecasts far more accurate and easier for business owners to understand.

Forecasting your cash flow can help you to preemptively spot any cash surpluses or shortages coming your way, giving you enough time to put the necessary plans in place to cover a cash shortage or make use of a surplus. After all, forewarned is forearmed!

Review your processes

However, your forecasting tool is only as good as the data that goes into it. The two main contributors that influence cash flow are receivables: the money your customers pay you, and payables: the money you pay your suppliers.

Receivables usually get all the attention. A business owner’s natural response to improving cash flow, is to get more cash in through the door.

Consider your payment terms -  common problem for most businesses is the late payment of invoices which can have a serious impact on the bottom line. So, for December, you could consider asking for a deposit from clients or customers up front. 

Offer incentives to pay early – Or how about a discount? No one can resist a discount and Christmas is the prime time of year to give one! Offering 5 – 10% discount to customers as an incentive to pay their invoice before Christmas can be an appealing offer.

As well as thinking about encouraging early payments you should also have a process in place for chasing late payments. Think about the best times to start re-issuing your invoice and ensure you have a stage where you follow up with a chaser phone call.

Reducing costs and processing time in your payables as well as having up-to-date data is equally as important to the success of your business.

Automate, automate, automate

With automation tools such as AutoEntry or ApprovalMax, payables time can be reduced to minutes and costs reduced to pennies by these Cloud application. By automating manual tasks like line-by-line data entry and approvals processing, you can free up time to allow your team to focus on growing your business. This isn’t the only benefit though; real-time accounts payables data ensures:

  • You have real-time business insights at your fingertips
  • Your business can take advantage of early payment discounts
  • You keep track of your outstanding debtors
  • You can accurately plan your cashflow.

The power of the connect Cloud

Float, AutoEntry and ApprovalMax are just a few great examples of the applications that can deliver more value when used together. There are many powerful Cloud-based apps available on the marketplace, but by harnessing the combined power of these tools, your business can ensure it is set for success.