Every SME feels stressed out about managing cash flow during the festival, especially at Christmas, Thanksgiving, and New Year. Prospa CEO Beau Bertoli has serious concerns regarding small or medium-sized business owners not spending quality time with friends and family due to the cash flow problems. He says. “Small business owners make big sacrifices to make a better future for their families. Managing a small business takes its toll, and it can be difficult to switch off…”
With COVID-19, small and big businesses are under severe crisis. As they transition to the year 2022, they need to ensure that they are putting the best foot forward.
Managing cash flow on a day-to-day basis can be very tiring, frustrating, and sometimes challenging. It sometimes can even keep you awake at night. Seasonal fluctuations impact different businesses. For some, it is good news, while for some, it is bad news.
As per the National Retail Federation, small businesses tend to make 20-40% of their annual revenue. It is actually the most profitable time of the year for retailers and service-based businesses. However, the small and middle-sized business must be fully prepared for leveraging opportunities for sales. This includes increasing staff members, stocking up holiday favorites, preparing holiday gift incentives, using diverse means to reach customers and sales. However, arranging these also takes money. This blog post will cover all the details regarding what you need to do to fulfill the holiday season ash demands to ensure a successful season.
- Review current cash flow statements
Start looking out for things that can give you a cash infusion, like collecting outstanding accounts receivable. Try finding out where money might have been short and find out how your business may have done better with having more cash on hand.
- Send your invoice early
The best way to ensure your cash flow is going smooth is by making sure invoices are sent to customers as early as possible. Most businesses, shops shut down during the Christmas period. Hence, payments to creditors are more likely to be made by 20th December or after 10th December. The sooner you send out your invoices to customers, the more likely you will be getting paid before Christmas. Another strategy to maintain cash flow is setting up automatic invoice reminders. This is a great way to remind your customers about your payment terms. This is probably the best way to remind the customers about your payment terms.
- Deal with late payers
You are managing to provide a product or service during the festivals when the demands among customers are higher. When you are putting in so many efforts, you have all rights to be paid within your agreed payment terms. You have your own bills to pay; thus, it is essential not to let these things slide away.
The best way to deal with this is to chase the payment as soon as it falls due. You should also ensure building a good relationship with the right people in the accounts department.
Anna Kyriacou, an accountant at Sydney’s AKA Group, suggests “Emailing seven day before the due date as a reminder, and keep calling daily for those overdue, as you don’t want to finish the year off with cash flow sitting in debtors…”
- Clear up your stock
Linden Toll, CEO, and founder of Apricity Finance suggests all SMEs sell all stocks at a discounted rate ahead of the Christmas period. Here is what Toll has to say on this –
“Anticipate demand by looking at your sales from last year as well as other variables; consumer confidence, political climate and other economic and social factors that might influence the behavior of your customers…”
- Solidify new purchase relationships
If we look at all the months in a year, January is usually the slowest sales month. This is the best time to nurture those relationships that you have cultivated for a long time. This way, your customer will keep on feeling positive about your brand or services, and they will be looking forward to revising you in the future. You must do everything to maintain trust between your business and your potential customers. Long-term royalty will be a big priority as you forward.
- Provide discounts
The best way to ensure that the invoice pays super-fast is by offering a 10% discount to clients who choose to pay within 7 days. You will be getting more customers on those specific days, leading you to earn more profit.
- Set reminders
Many customers are so busy with day-to-day work that they end up shopping for the last minute. With everything going around and the annual stress of getting Christmas ready, people can be a little absent-minded than usual. In addition to Christmas shopping, there are family events to organize, catch up with friends, and prepare end-of-year parties.
You can help the customers by giving “final warning” reminders just before a two or one week ago of Christmas. This is especially beneficial for those businesses who tend to lose money from no-shows.
- Improve your customer service
Even after your customer buys the product, you still have to continue with your customer support. It goes much beyond that. After customer buys the product, they might face lots of problems like finding a dent, wrong color, and stopped working after a day or two. You do not want your customer to get frustrated and stop coming to your store or buy negative reviews online. You will require jumping to get the situation fixed.
WRAPPING UP:
Despite the holiday rush you face in your business, you must have fun with your sales and campaigns. The information you will find in the blog post is for general nature only. So when you build your strategy, consider your objectives, needs, and financial situation. No matter whatever business you might be handling, you must ensure that you plan for a long time; otherwise, it will not be easy to manage cash flow during the rush hour.
AUTHOR BIO:
Ethan Taylor has pursued MBA from one of the top MBA colleges in the USA. He is also associated with Assignment Help, where he offers Cheap Assignment Help to college students.