Preparing your books for Christmas

Although Christmas is the most profitable time of year for retailers, other businesses often face severe cashflow problems. Partial shutdowns and annual leave make it hard to make or receive payments during December and early January, all of which has a major effect on the bank balance of a contractor or freelancer.

Chase payments now

Overdue accounts that are not cleared in the first week or two of December are unlikely to be fully paid until sometime in the New Year. It is essential then that you direct significant time and resources to chasing down overdue accounts to boost your bank balance before the Christmas shut-down.

Cut back on expenses

Your business should protect the current bank balance by reining back on expenditure in anticipation of reduced income. This means delaying any non-essential expenditure until the New Year when cashflow resumes normality.

Don’t forget salaries

Most businesses pay staff towards the end of the month. If you have staff and are planning to take leave, make sure that you have the funds available to cover salaries and expenses, and that your payroll system is set up ready to make payments on the appointed date.

Is invoice finance the answer?

To ensure continued cashflow even as customer offices close for the Christmas break, your firm could consider using invoice financing. Rather than resorting to costly business overdrafts or short term loans, invoice financing allows instance access to cash until the client pays their invoice.

You still have a few weeks left to get ready for Christmas – use them wisely!