How To Manage Your Business Finances Over Christmas

For many businesses Christmas is the time of year when bells are ringing and tills are jingling! If your business is one of these, then you probably don’t even have time to read this blog post as you hit your busiest period! But for others, Christmas is the time of year when things begin to slow down and certainly for many businesses (including those currently enjoying the Christmas rush), trading can be very slow in January.

Managing your cashflow over quieter periods is essential, and now’s the time to get a financial plan in place to ensure your business survives the lull. Additionally, you may have extra expenditure over the Christmas period (Christmas parties, corporate gifts, staff bonuses), as well as factoring in Bank Holidays and any annual leave staff may take. Having a comprehensive overview of your business cashflow is therefore vital.

10 Tips For Small Businesses To Manage Finances Over Christmas

Here are my tips for managing your business finances and having a healthy start to the New Year:

1. Financial Planning – have a clear idea of finances going in and coming out over the Christmas period. Look at past history to predict when business is likely to pick up and by how much.
2. Negotiate Favourable Terms – try to spread or defer bills and other expenses so that your outgoings are minimised while your incomings are low. However, remember you will have to pay these at some point!
3. Be Proactive With Invoicing – if you generally leave your invoicing until the end of the month, get the money in earlier by invoicing promptly. Make it easy for clients to settle their invoices by BACS, Direct Debit etc.
4. Set Your Own Payment Terms – with new clients or one-off jobs negotiate more favourable payment terms for the Christmas holiday.
5. Conduct A Credit Check Against New Clients – unfortunately it can only take one bad debt to seriously upset your business finances, so although new custom will be welcome during a slow period it’s wise to make sure they are creditworthy.
6. Chase Late Payments – with potentially more time on your hands (or staff with a reduced workload) there’s no reason to allow debtors to fall behind. Put a plan in place to chase outstanding payments and ensure you’ve banked all money owed.
7. Review Your Banking Requirements – have a look at whether you could be getting a better deal on borrowing or charges elsewhere. Speak to your bank to see whether they can recommend ways or products that can help reduce your banking costs.
8. Reduce Stock – keep your stock at a minimum so you are not paying out unnecessarily for items you are unlikely to shift. Old lines may benefit from being put on sale: take advantage of Black Friday (28 November), Cyber Monday (1 December) if your product lends itself to pre-Christmas sales, or Boxing Day where once again record numbers of people are expected to take advantage of sales on the High Street and online.
9. Take A Holiday – many employers give staff the days in between Christmas and New Year as holiday. This may seem like a generous gesture but it may also make financial sense. Although the cost savings of closing your premises may not cover your staffing bill, they can contribute to some savings. And if staff are not working at capacity anyway, it may be the best route for your business.
10. Build Relationships With Clients And Suppliers – spread some seasonal cheer by taking the opportunity to build on your existing business relationships, so ensuring that you have the foundations for a successful 2015. Whether you send cards or gifts, make an effort to thank them for their business and support over the past 12 months.

Of course, if you are currently rushed off your feet fulfilling Christmas orders you’ll appreciate a rest in the New Year but don’t spend your earnings all at once! For businesses that rely on Christmas for a boost in their income, and those who also benefit from the New Year sales, financial planning for the rest of the year is crucial to make sure you are ready for Christmas 2015.

At Black & White Accounting we want our clients to make a success of their business and this can only start with sound financial planning. Call us if you wish to discuss your business for impartial advice on managing your accounts 0800 140 4644.