Christmas is a joyous time of year, and in Australia, a time for great weather! That being said, it is also a time when businesses are often faced with dreaded cashflow challenges. These can be due to a number of things such as change in consumer spending habits, pricing strategies, team members taking annual leave, a string of public holidays, additional opening hours (or closing for some!), and recruiting and managing casual staff. On top of that, most owners are hoping to pencil in a holiday!

Here are 7 tips to maximise your free cashflow over the festive season:

  1. Review and proactively follow-up all of your outstanding debtors. Once school holidays start and people go into holiday mode, there is little chance you’ll get your invoice paid until the New Year, so get onto it now!
  2. Don’t pay your suppliers too quickly. If your supplier is giving you 30 days to pay their account, then take the 30 days. If you have key relationships with suppliers, communicate with them and ask for more favourable trading terms over the period.
  3. Don’t be spontaneous and buy any large “unplanned” assets and remember to minimise expenditure where possible to preserve as much cashflow as you can. This isn’t the time to spend just because there’s cash in the bank. It’s there for a reason…to get you through this crazy period!
  4. Pre-determine your pricing structure and forecast the effects on your bottom line. It’s amazing how many businesses price products or services that make that service line unprofitable to the business. Make sure you crunch your numbers. Just because Coles drop their prices “down down”, doesn’t mean that strategy will work for you. Keep in mind Coles had revenue of $62,000,000,000 in 2013-14!
  5. Forecast any additional staffing requirements. This is not only from a capacity point of view to ensure your service/product has enough support, but also to allow for the spike in wages and entitlements over the holiday period.
  6. Casual staff come and go so ensure you have efficient and compliant procedures in place to facilitate this process. Use a tool like enableHR.com.au.
  7. If you (as the owner/manager), are planning on taking some time off, plan ahead and communicate with your team. Who is going to take responsibility and man the ship while you’re gone? Do they have the ability to pay the bills? Manage HR? This ultimately comes down to your policies and procedures, so consider reviewing them now (or start creating them if they don’t exist). Many of these managerial tasks are repetitive and can be systemised, so why not take them out of your head and put them down on paper?

The key here is to use some common sense. Remember, the ATO gives you until 21 February 2015 to lodge and pay your October to December 2014 Activity Statement (if your turnover is >$10m) so in your forecast, ensure you pencil in this important obligation. If Christmas is the boom time for your business (e.g. retail, hospitality, tourism etc.) your December BAS will most likely be a lot larger than most other periods and this will need to be accounted for in your cash management.