The Festive Business
For all businesses, Christmas is a time for careful planning as work rosters need to be juggled, sufficient stock (and the right stock) needs to be carried to ensure you have a good Christmas turnover, staff Christmas functions need organising … cash flow remains king.
The earlier you start to plan, the better prepared you will be. Following are some of the key elements you should be looking at. Break each point down and put your mind to each one individually – satisfaction will be gained from ticking each one off.
What you should be considering:
- Work Rosters – Ensure you have sufficient staff to carry you through your busy days, hours or weeks. Take care when working around statutory holidays and seek advice if you are unsure of your obligations when paying holidays.
- Stock levels. Are you carrying sufficient levels of the right stock to support a good Christmas turnover? Any stock that has been sitting on the shelves for a long period will continue to do so if you don’t discount for a sale or send it back to the supplier for a credit – after all stock is simply cash waiting to get to your bank and carrying excess impacts your cashflow. Arranging to send unsold items back to the supplier if it does not sell is a good backstop.
- Lay-by – Do you offer a lay-by option? This could be a useful tool to achieve an early sale for those organised individuals who do their Christmas shopping early. Also consider whether you can get longer payment terms from your supplier; ensuring you do not create a cash crisis post-Christmas, when business may not be so busy.
- Cash is king. Get paid up front or offer a lay-by service. Chase slow paying debtors and if you don’t get paid by Christmas, be prepared to wait for a further month or two in the New Year. Also be wary that pressure is put on cashflow by some suppliers shortening their credit terms e.g. 7 days and holiday pay needing to be paid out.
- Banking – Ensure you’re in regular contact with your bank manager. They’re more likely to respond positively to any requests for financing or extra facilities to support cashflow if they’re informed early on.
- Tax – Don’t forget that GST and the 2nd instalment of 2018 provisional tax are due on 15th January for March balance date taxpayers. The PAYE for December is then due soon after on the 20th January.
Like Christmas shopping, the earlier you start on these things, the easier it is and the better the outcome. Admittedly, this may be easier said than done, so if you need help, get in touch with your bank, accountant or suppliers now and start planning.