The ‘Christmas effect’ on business cash flow

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Whilst the Christmas period is, of course, a time for celebrating and taking a well-deserved break, for businesses, festive planning can often pave way the way to stress and cash flow issues into the New Year, in large part due to the shorter working month.

We often call this the ‘Christmas effect’; as clients begin winding down prior to their break over Christmas, emails may get missed, payments may be delayed and ultimately your own business’ cash flow may be impacted as a result.

So what can your business do to reduce the ‘Christmas effect’ on cash flow? We take a look below…

Prepare for team annual leave

Of course, for many businesses the festive season means time off between Christmas and New Year. However, your team will likely also look to take time off for a whole range of activities, be it Christmas shopping, a trip to the panto or anything in between, so it is crucial that you plan ahead. The same will apply to your clients also, so be aware that you may receive a higher number of ‘out of office’ responses to your emails at this time of year.

Any deadlines you may have, we would recommend a couple of buffer days either side to ensure you are able to effectively meet these with a smaller team.

Invoice early

Ensure there are no delays in sending your invoices out in the lead up to the Christmas period. For recurring invoices you may even want to consider sending these out early to ensure they get in front of your clients’ accounts payable department as soon as possible.

Chase for payment

For invoices that fall due prior to or during the Christmas break, ensure you chase promptly. A polite reminder for those falling due when your client’s business may be closed could encourage early payment or at the very least, make it one of the first paid in the New Year.

Enjoy your Christmas break

The lead up to Christmas can be draining and so it is vital that you make sure you take time out and truly enjoy your time off. Recharging your batteries will mean you’re able to hit the ground running come January!

On behalf of the entire Ellis & Co. team, we’d like to wish you a very Merry Christmas and a Happy New Year!