Avoid a Cheerless Christmas

It’s November. The nights are drawing in, the mornings are becoming frosty and it becomes a time for reflecting on our summer hols and those days in the sun that now begin to feel like a very long time ago. Then suddenly the ‘cash flow itch’ reminds us that it’s only one more month until the dreaded ‘C’ word “What’s Christmas really got to do with cash flow?” we hear you ask.

Most people’s payment terms (or perhaps their monthly payment chasing cycles) tend to dictate that invoices raised in October fall due for payment at the end of November, so primarily it is these invoices that will be your Christmas cash flow. November in the credit control department is all about getting your diligence done to set yourself up for a stress-free run up to Christmas and a genuinely enjoyable period away from constant emails, or similar. The following three steps should help you prepare to best effect.

Step 1

Do the extra diligence checks on both any new customers and indeed any existing customers that have large orders either anticipated or in process. Secure up to date credit checks and take some time to investigate customers through search engines. You need to know if any adverse business news about the company you’re entrusting your cash flow exists so that you can act quickly wherever may be necessary. Hopefully, this won’t be required of course.

Step 2

Take extra care to ensure the information that you put on your invoices is accurate. If anything is wrong with the invoice, it may only come to light once you are chasing it, which may be once the holiday season is starting to bite. Any sort of unnecessary delay might result in your customer’s own cash flow drying up as quickly as your own could.

Step 3

Take some extra time to speak personally with your customers’ purchase ledger clerks. Business is all about building good relationships. You’re more likely to get paid in the Christmas rush when a customer likes you, or more importantly, understands that you need paying. The more proactive you are the better. Follow these simple tips when it comes to monitoring your purchase ledger and you’ll already be several steps ahead when it comes to enjoying the holiday season. If we think about things logically then most business operating on credit tend to have approximately three weeks only (at best) to get monies in during December.

When we balance this situation up against the fact that overheads during the same month can arguably amount to the equivalent of five weeks overheads going out (with Christmas bonuses and staffing dinners and so on) then it is little wonder that ill-prepared companies find their coffers empty come Christmas Eve, with no sign of respite until well into the first week of January. As we’ve said, this can be best managed with a little simple preparation. For further advice and guidance as to how to avoid the holiday period having an affect your credit control procedures as well as any other discussion with regards risk and recoveries in general, don’t hesitate to contact us, your approved BPMA credit management provider. We’re always there to lend a hand.

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