Planning ahead for Christmas cash-flow issues

Christmas can be a particularly difficult time for some small businesses, as a slowdown over the festive season can place pressures on finances.


For firms waiting on capital from invoices, late payments are more common in the run-up to Christmas and the early part of the New Year – commercial finance business IGF has revealed.


Therefore, firms are being warned not to celebrate Christmas too early and are advised that prior planning should be made to ensure sufficient funds are in place to cover outgoings.


Preparation for the six week period over the festive season can mean that a company is protected in the event of failed payments or other issues in their supply chains.


Many staff can also be on holiday during the festive season, meaning that a close eye is not always on business finances and balance sheets.


In these instances it can mean that financial problems go unnoticed and these can cause many different issues if not dealt with quickly.


In extreme instances, the issues could cause a company to consider its future, with company administration or restructuring becoming a requirement.


Many businesses will want to avoid these types of problem in the run up to Christmas so plans should be made to cover any missing or late payments.


Having flexible levels of finance are recommended, particular for stores and businesses that are dependent on sales volumes.


Bank overdrafts can be a costly solution while company credit cards can place further pressures on a cash flow in the short term.


Chasing businesses for payment is recommended in the period before Christmas, so that extra finances are in place before the holiday season begins.


This places some extra money in the bank in the event of a customer failing to pay on time, while alleviating some of the pressure on the bottom line of the business.


By Phil Smith


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