7 Simple Ways to Increase the Cash Flow of Your Business Over Holiday Periods

Christmas and New Year are now over but the cash flow delays live on!

Every year we experience a slow down in the speed with which customers pay over the Christmas and New Year periods and we also see this affect the clients that we deal with.  Each year as we approach the holiday season customers take an extended period of time to pay their outstanding sales invoices.  The delays are often attributed to staff holidays, delays with the post, the weather (the snow having been a significant factor this year).  In reality very few payments are received right through to the end of January when cash flow begins to return to normal.

In view of this trend that repeats itself every year we thought we would publish a few ideas that might be helpful in smoothing the cash flow of your business over holiday periods.  They are as follows:

1. Think and plan ahead - firstly accept that payments will be delayed over holiday periods and factor that into your cash flow forecasts.
2. Pre-dunning - contact customers in advance of your invoices falling due in order to gain agreement as to when you can expect payments by.  Discuss the issues over payment delays in advance with customers, once they have given some kind of agreement to pay on time the chances of them sticking to it increase.
3. Check contact details - contact your customers confirm who will be available over the holiday period to help you with payments.
4. Invoicing in advance - you might consider raising your invoices earlier, if you invoice monthly for instance, December's invoice could go out late November so that it is in the system earlier and has more chance of being processed and paid on time.
5. Consider using invoice finance - invoice finance companies (who provide factoring and invoice discounting) will pay you a significant percentage of the value of your sales invoices as soon as you raise them.  Using this kind of finance could help bridge the cash flow gap over holiday periods.
6. Build your reserves - if you know that a cash flow slow down is coming plan for it by building your reserves throughout the rest of the year.  Put aside a reserve in order to see you through the potential issues that arise during the holidays.
7. Slow down your own payments - wherever possible plan to slow down the payments that you make to your suppliers to counter the cash flow effect of your own customers paying more slowly.

This issue will affect us all again at Easter, then in the summer holidays and again next Christmas so now is the time to take action and improve the cash flow of your business.