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Dec 2019

5 tips to avoid New Year financial cashflow hangover

December 5, 2019
Capify Australia
Avoid the New Year business cash-flow hangover
avoid cash-flow hangover

Every business has seasonal ups and downs. For many, the Christmas and New year period means customers are away and accounts payable departments might be a little slow to pay invoices, impacting your financial cash flow. That can lead businesses to struggle to pay salaries and business bills and keep things running. But some judicious planning can help ensure you avoid a New Years financial hangover.

1 – Look at the past to plan the future 

Most businesses follow seasonal peaks and troughs. For some, those cycles occur annually while for others they follow a different cadence. But a lull over the Australian summer is very common. That means you can plan for it.

Look back through your sales and payment history over the last few years and look at when you can expect cash flow to become tighter. 

By knowing when your revenues are at their highest and lowest you can set aside funds to ensure you have enough cash in reserve for the quieter times. That allows you to budget for the quieter and busier times appropriately.

2 – Tighten your belt

You can reduce your costs over the quieter times by looking at what expenses you can cut over the holidays. For example, you can suspend services like Netflix in the office, newspaper deliveries and other recurring expenses so you’re not paying for things you won’t use.

You may even find your recurring costs for cloud-based IT services can be scaled back if systems aren’t being used at the same level.

3 – Look at billing frequencies

One way to avoid summertime cashflow hassles is by smearing costs over the year. Although the default for many bills is quarterly or annual, there are options for shifting to monthly or weekly billing cycles. So, instead of dreading a $5000 quarterly power bill, you can move to a $1700 monthly bill. That way, when cash flow is at its lowest, you won’t be hit with massive bills. You can also use sites like Finder to compare utility vendors and save money on bills.

Car registration in some states can be paid monthly as well, and other essentials like insurance can also be moved to monthly cycles. 

While you won’t be paying any less over the course of the year, you can flatten the peak and troughs making it easier to manage cashflow and help with budgeting. 

Similarly, you can also reconsider your own billing processes and think about shortening your payment terms to get funds paid into your accounts before the holiday break.

4 – Explore financing options

There are a couple of simple ways to reduce your outgoings and improve your cash on hand position.

If you have a good relationship with your suppliers, you may be able to establish an account with them so that you can make bulk payments for products and services. So, while you continue to purchase goods, you can pay for them later. This will help when your cash balance might be low, but you need to get back to work after the summer break.

Another option is to take out a loan with a trusted finance company, like Capify, to help bolster your balance while income levels are lower than normal.

You can access $10,000 to $300,000 of business finance with a 24-hour* approval with minimal paperwork and no security required. We’ll also work with you to ensure your repayments are easy on cash flow and offer you a quick renewal process.

Simply click below to get started on an obligation free quotes and see how much we can approve you for.

5 – Ramp up your marketing 

In the lead up to the quieter weeks, you can invest some time and effort into marketing. For example, you can contact customers that might have fallen away recently to make them a special offer for products or services over the summer.

You can also create special offers for existing clients and use the quieter times to establish marketing and business development plans for the new year so you’re not caught out next year.

The holidays should be a time for relaxation but for many business owners, it can be stressful. But careful planning can alleviate some of that stress and ensure the bills are avoided and you’re ready to fly in the new year.


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