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Five Tips to Manage the Holiday Cash Flow Crunch

By MarksNelson on November 21, 2017 in Articles, Entrepreneurial Services, Jennifer Katrulya

December is always a tricky month for small businesses. You probably have extra expenses, things like bonuses, customer and vendor gifts, and year-end charitable donations.  You may be catching up on taxes and employee reimbursements, paying up bills, and making last-minute contributions to retirement accounts.

Meanwhile, your customers are facing the same payables problems, and they may be reticent to settle accounts before the New Year. But you should still maximize your efforts to start 2018 with a positive cash flow. Here are some suggestions.

Accelerate accounts receivable and decelerate accounts payable. This makes sense any time of the year, but especially for this month. You may feel like a Grinch by sending out payment reminders and making phone calls to past-due accounts, but business doesn’t grind to a halt just because the holidays are coming.

Because some of those customers won’t come through, pay your December bills on time, but none too early. Put off what you can until after the 1st.

Track cash flow carefully. Have you ever created a Statement of Cash Flows report? This would be difficult to do manually, but accounting software like QuickBooks can generate one in seconds. Normally you might only do this monthly, but don’t wait until the end of the month and find that you’ve been in the red. We can help you create and analyze this report.

Look at your inventory levels. Again, this is easier if you’re using an accounting application, but you undoubtedly have a way to know how much stock is available, what’s selling, and what’s not. This is a perfect time to discount items as shoppers are looking for last-minute bargains. Once we’re into the new year and you’ve cleared out some of the chaff, you’ll be able to reevaluate your overall inventory of product offerings as you plan 2018 purchases.

If you’re a service-based business, offer gift cards at 10 percent off. Promote these heavily on your website and social media.

Enlist the help of your staff. Unless you’re a sole proprietor, you may not be the only one in your company who can have an impact on cash flow. Talk to employees about the challenges of staying in the black during the holidays. Offer a year-end prize to the staff member who is the most successful at cutting expenses or clearing up past-due accounts.

Consider delaying year-end bonuses and gifts. It’s nice to make these extras available before the year winds down. But sometimes your generosity gets lost in the shuffle. Wait until January and consider them New Year’s offerings – especially if you’re having trouble collecting customer payments this month.

The time to do these things is now, starting today. The closer we get to the holidays, the more your customers and vendors are distracted.

Once you get through December, plan to develop ways to avoid the year-end crunch in 2018. We’ve helped countless business in this area, and we’d be happy to work with you on cash flow awareness – and other elements of your overall finances. Let’s talk about it. Contact your MarksNelson professional at 816-743-7700.


Jennifer Katrulya

Practice Leader