Putting Christmas feet up: tackle Christmas cash flow now so you can relax later

The holiday period can be an especially difficult time for small businesses and their cash flow. Work slows down, your customers may go on holiday, but your regular expenses continue. This can put a strain on your bank account balance, as well as your festive spirits.

But a bit of planning ahead now can go a long way to ensuring you are able to kick back and relax later.

Tackle your debtors

  1. Use November to start issuing friendly reminders for upcoming payments, giving you December to chase up any which are late.

  2. Issue all your December and January invoices early and well ahead of Christmas. This leaves your customers plenty of opportunity to arrange payment, and gives them less excuse for not paying on time.

  3. If any of your customers close down over this period, have them settle your bill before they go on leave. If they cannot pay the amount in full, ask if they can part-pay your invoice. Either way, the more money you can secure in your own bank account at this time, the better you'll be placed to cover your bills over the summer break.

  4. Keep on top of your late payers. The more you keep chasing, the less likely they will try and put off your bill until the new year.

Downsize your staff roster

  1. Keeping in mind that business will likely slow down, roster only a skeleton staff to manage the day-to-day and let the rest of the team enjoy a summer break. Over-staffing will cost you more in wages and cut into your bottom line, which will not benefit your bank balance during this crucial time of year.

Sort out your creditors

  1. Look ahead for which bills you can expect over the December/January months, and prioritise them.

  2. If you think you may run into cash flow problems, start a conversation with your creditors sooner rather than later. They will appreciate your openness, and may be able to accommodate you paying in instalments or deferring payment until next year.

  3. Where taxes are concerned, paying late will incur hefty accruing penalties and interest. Again, it is better to contact Inland Revenue as soon as you anticipate a problem meeting your obligations. You can discuss options with them such as setting up a payment plan. Another option is using a tax pooling company like Tax Traders, which allows you to spread tax payments over the year. Remember: provisional tax and GST may fall due for you on 15 January 2020, so get prepared now.

  4. Talk to your bank about increasing your overdraft or getting a loan to cover any holiday period short falls. Bank fees are much lower when you have approved lending in place.


If you would like us to assist with cash flow forecasts, Inland Revenue dealings or applying for financing, drop us a line. Our team of experienced Chartered Accountants have lots of experience dealing with matters such as these, and can help find solutions that work for you.