The holiday period is well and truly upon us, so our latest blog has been designed to give you some strategies to navigate the key considerations as we head toward the New Year.
When it comes to managing finances, many small businesses find this period the hardest to navigate, so before we put a bow on 2023, here is your Christmas cash flow checklist:
• When possible, request deposits and invoice early and often: Get ahead of the holiday disruptions and company closures to ensure you will have cash flow during the summer period
• Take the time to review credit reports and talk to potential late payers: If individuals or companies are delinquent during the year, there is the likelihood they may cause delays during the holidays as well. Identify them and action these invoices as a priority
• Assess receivables management in quiet periods and find improvements: There is a lot of cash trapped on balance sheets that some businesses are unaware of. The benefits of freeing up that cash can go beyond improving operational efficiency. It provides companies with the additional liquidity they need to fund growth, lower debt levels, minimise costs, increase shareholder returns and outperform the competition.
• Put your business on a more solid footing for the New Year: You can achieve this by improving your relationships with customers and suppliers during the Christmas period.
• Make sure your sales forecasts are accurate now by clearing overstocks and inventories: According to Pareto’s Principle, 80 percent of the consequences result from just 20 percent of the causes. In other words, just 20 percent of your inventory items account for 80 per cent of your sales. The goal is to identify the 20 percent and keep more of them on hand while reducing the rest of your stock. This will enable you to free up money, offer products at reduced prices and lower inventory wastage
• Focus on new projects: What investments can be held off until cash flow is more robust?
• Offer early payment discounts: This will assist in encouraging early payments.
• Review your expenses: It may be more cost-effective to shut down departments or even your entire business during slow periods
• Consider working capital financing: When working capital is stretched, most business owners consider a bank loan. But strict lending criteria and a slow approval process mean this type of business finance often isn’t the best option. There are many other types of working capital funding options you can explore to suit your business.
You can learn more about managing working capital or call us to discuss what working capital finance solutions could be available for you.
Here at ScotPac, we offer a range of Business Finance solutions that can help you manage your cash flow over the busy festive season. Our team of lending experts can help you unlock the capital and tailor a solution best suited to your business needs.
Use our simple enquiry form or give us a call, and our team can get to work on securing the funding your business needs to thrive.