The festive season is upon us! And you know what that means – seasonal fluctuations are at their peak on both ends of the scale. While some businesses are at their busiest time of year, others are closing their doors, with many closing production altogether (and those bills aren’t going to pay themselves).
Seasonal cash flow problems shouldn’t be taken lightly and although you may be running around like a headless turkey trying to tick off all of your Christmas list tasks (both for business and in your personal life), cashflow can often fall short of the list.
Managing cash flow in a seasonal business isn’t an easy task. Here we’ll run you through some easy to follow cash flow tips to get you through the holiday season.
Forecast cash flow & understand your cash flow cycle
Don’t miss this crucial step!
If you’re able to plan how much is going in and out of your business from month to month, you’ll be better equipped to make the right financial decisions in your business and beat seasonal cash flow problems. You’ll know the money coming in and going out of your business to help you better manage your cash flow in this slow (or busy) period of the year.
Check out cash flow forecasting to learn how to forecast more accurately.
Chase unpaid invoices before it’s too late
47 percent of invoices issued are paid late – on average by 60 days!
Mastering the art of payment discipline is not only crucial during the holiday season but also for the entire year. Unpaid invoices are the arch-nemesis of positive cash flow and a problem that all business owners need to tackled head on. No more sweeping it under the rug, if you want something paid, you need to chase it up yourself.
When going after an unpaid invoice, we recommend using a variety of mediums. First, give email a shot and if that fails, move onto phone calls. Try to be understanding and consider offering a payment plan in installments for those who are struggling to pay up. Although not ideal, at least this way, you will eventually get paid.
If you’re struggling to get your invoices paid, consider using Invoice Financing (with no collateral) to cover the outstanding invoice.
If chasing those unpaid invoices is an uphill battle, think about offering incentives to pay early.
Consider mobile payments
If you haven’t already, you should look into mobile payments. With everyone walking around with a mini computer in their pockets, i.e. their phones – there’s no excuse.
If your business has a EFTPOS machine or some form of contactless system, you’re almost good to go. Make the change today to start accepting new payments forms just as those from Google Pay and Apple Pay.
Diversify income streams
Don’t put all of your eggs in one basket.
Many successful businesses and individuals are able to fast track their success and growth by following this age-old adage by tapping into different revenue streams.
For example, Apple doesn’t just sell hardware, but also music and apps in iTunes. A ski rent shop may decide to sell hats and warm clothes, or perhaps partner with an ice-rink to sell tickets and get a little extra profit. Or a restaurant could offer cooking classes during their slower times. This is just one of many examples of ways that you can diversify income streams.
Have a little brainstorm session – no idea is too out there, and see what you can come up with for your business. Just make sure that your new revenue stream is relevant for your business and your golden.
Plan for unexpected expenses
It’s almost Christmas and outgoings are bound to peak.
There’s the holiday gifts, employee parties, and for warehouses and eCommerce businesses there’s the extra inventory and so on. Make sure your cash flow is prepared for the impending season lull!
Small business cash flow should be prepared to take a small hit, and although it’s not useful to hear that you should have been prepping for this earlier in the year – well, you should have. If you weren’t prepared then take this is a lesson for the next year to come.
What you can do to improve cash flow, is make sure to postpone any large expenditures that aren’t absolutely crucial to the smooth running of your business. These can wait for the new year when your revenue takes an upward turn.
Read business survival during the off-season for more great tips!
Prepare for a loan or line of credit now!
Managing cash flow in a seasonal business is no walk in the park. If you’re in a troublesome period it’s always a good idea to make sure you have a bit of money on the side ready for a rainy day. Consider looking into business loans to make the holidays that bit easier.
With Become, you’ll be matched up with one (or more) of its 40 lending partners and shown which loans you can qualify for. You can gain access to equipment loans, lines of credit and more.
Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.