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Christmas Cash Flow Tips for Small Business


Are you prepared for the festive season?

It’s beginning to look a lot like Christmas…….

The retailers are fighting for the top spot with their Christmas adverts, the high street is adorned with twinkling lights and there’s a definite chill in the air – it’s certainly beginning to look a lot like Christmas! But whilst you may be looking forward to the fun, festivities and spending time with the family, if you’re a small business owner you may have other things on your mind – cashflow! If you have a seasonal business, Christmas could be the busiest (or quietest) time of year for you! As a freelancer or sole trader, you may be feeling the pressure to be financially secure during the festive season due to increased spend at home on food, presents and events. The maths is simple - if your customers don’t pay you, your family Christmas will be compromised! If you own a small business, you may be concerned about paying seasonal staff or purchasing more stock (or be worried about a dip in income if it’s a quiet time of year for you!) You may have extra demands you need to prepare for so here are some tips on how to manage cash flow at this time of year.


Identify your Christmas cashflow challenges

First things first – you need to consider whether a cashflow problem is likely (and figure out a way to tackle it!). Prepare a Christmas forecast (an excel spreadsheet is ideal as it will do the sums for you) and document what you know is coming in and going out. Think about potential cashflow issues such as additional staff, additional stock, warehouse space, staff holidays, adjusted customer orders and late payment of invoices.

Why is cash flow so important?


Lack of cash is one of the biggest reasons small businesses fail! The Small Business Administration have identified that “Failure to adequately anticipate cash flow” is one of the top reasons why start-ups don't succeed. Simply put, you will run out of money and it will close you down faster than you can say “Lebkuchen”


“Failing to prepare is preparing to fail” - Benjamin Franklin

One of the best ways to ease the burden at Christmas is to keep on top of your invoicing all year round:


  • Don’t wait! Invoice straight away upon delivery of your product/service

  • Consider asking for a deposit upfront (or a payment part way through)

  • Don’t be too lenient with your customers – be direct and fair

  • Use a debt collection agency to get any overdue invoices paid


And don’t forget! You are entitled to add a late payment fee and/or interest….


Short-term cash injections

An injection of cash can help you have a stress-free Christmas. New businesses especially, are likely to need a loan or form of credit to cover shortages in cash flow, particularly at this time of year. Whether you need extra money to service seasonal demand, or to cover a dip in trading, these solutions can help with your cash flow situation:


  • Short term business loan (some can cover as little as three months)

  • Business overdraft (which acts as a constant source of money that you use as & when required)

  • Business credit cards – But take care! Interest rates can be high, so try and find one that is interest-free (provided you repay it within a certain period)


Whilst some early planning and preparation can help you avoid cashflow stress during the festive season, if you have left it too late, you may need some additional funding to stay afloat. Avoid stress and tackle it today to leave you free to focus on other dilemmas such as whether to have brandy butter or clotted cream on your mince pie!.....


Have you ever experienced cash flow issues at Christmas? How did you tackle it (and did your business survive?) Tweet us @debt_ltd to share your stories!

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