Cashflow is King

We want to extend our heartfelt thanks to all our referral partners for your continued support. Wishing everyone a safe and happy holiday season! We are truly grateful for your trust in us to assist your clients.

December is typically the peak time for cash flow for retail and hospitality businesses, but for many other businesses in other sectors, it can be a different story.

While businesses may close for the Christmas break, they will still face significant pressures and obligations.

• Employee wages continue to accrue
• Any ongoing lease agreements for office space, equipment, or vehicles will still need to be paid
• Basic utilities like electricity, water, and internet services often continue to incur costs, even if usage is minimal
• Business insurance policies will continue to require regular payments
• If the business has any outstanding loans, the interest on these loans will continue to accrue
• Any software subscriptions, professional licenses, or memberships will still need to be paid
• Creditors’ timelines keep ticking, with accounts nearing their due dates

All of the above can lead to a significant cash flow crunch in January and February. This seasonal dip can turn what should be a fresh start into a cash flow nightmare, making it crucial for businesses to plan ahead for the holiday season and reduce stress during this challenging period.

Here are some tips to help your business thrive during the festive season:

1. Now is the perfect time to start planning. Begin setting aside funds in a Christmas account. Having extra money saved can greatly ease your mind during quieter periods.
2. Stay on top of your invoicing during the busy lead-up to Christmas. Remember that many customers may be slow to pay because their businesses close for the holidays.
3. Clearly communicate your expectations for customers to adhere to credit terms during Christmas. A few days before payment is due, call regular slow payers to confirm they’re paying on time, as phone calls are more effective than emails.
4. How about offering a discount? Everyone loves a discount. Christmas is the perfect time to provide one. Giving customers a 5–10% discount as an incentive to pay their invoice before Christmas can be an attractive offer.
5. Late invoice payments are a common issue that can harm a business’s bottom line. For December, consider asking clients for an upfront deposit.
6. Consider Debtor Finance. Debtor finance allows a business to quickly convert unpaid invoices into cash, acting as a line of credit against receivables. Typically, the lender advances 60% to 80% of the invoice’s value within 24 hours. Although it comes at a cost, the interest paid is tax-deductible.

The holiday break also offers business owners a valuable opportunity to reflect and think strategically. This time for contemplation often results in important decisions, such as:

• Expansion plans or acquiring new assets;
• Changes to the business structure or financing;
• Evaluating their passion for the business and exploring new directions;
• Evaluating the viability of the business for the coming year.

Chat with us today – Let us help your clients establish a solid plan through the festive season and into the New Year!

If your clients are experiencing any cashflow challenges, they will greatly benefit from professional and independent advice. At de Jonge Read, we can assist with reviewing business structures and implementing strategic solutions. Additionally, we offer support in securing debtor finance and other short-term funding options through our finance partners.

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Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.mo1733402135c.arj1733402135d@ofn1733402135i1733402135

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