Can you believe that Christmas is around the corner? This is always a frantic time of year but it can be a difficult time for businesses. I was talking to my personal trainer the other day and he mentioned he will be shutting down for four weeks over the Christmas period because there is little demand during this time. Many other businesses do the same.
Even though you might shut down for the year, your rent, bills and expenses are still the same. This inspired my Enterprise blog post this week on “How to avoid the Christmas cashflow crunch”.
For some businesses, the Christmas period is a cracker. But for others it can be a near death experience.
Typically, as consumers get into the Christmas spending spirit, it’s a great time of year for retail businesses. When I ran a retail business in Sydney for six years, we often made more sales in November and December than in the previous eight months combined.
However, when it comes to wholesale, manfacturing and other business-to-business industries, the Christmas cash flow crunch can be deadly. Some businesses simply shut down because customers are not interested in transacting during this period.
Rob Lamer, head of debtor finance at Oxford Funding, says cash flow is impacted because many businesses are closed. “In January, we see a 30 per cent drop off in sales and cash receipts. Some businesses may have generated sales in November and December but they are not paid until February.”
If you typically invoice your customers, then you need to plan your cash flow carefully and be proactive in chasing your invoices.
You can read the full post here.
Posted on 3 November 2011