Seasonal Preparation – Christmas brings distinct challenges to cashflow.
Christmas brings distinct challenges to cashflow. Don’t get caught out, says Mike Collins Whisper it but the ‘C is on the Yes indeed, Christmas is coming and no matter how much we may not like it or be looking forward to it, you must be prepared for it. Regular readers will know that we at Direct Route like to keep BPMA members informed and educated as to handy hints and tips to ensure their credit management is as up to date, and as robust and successful as it can be.
Well, Christmas isn’t any different. In fact, it’s even more important – let us explain why. The invoices you raise now, will in most cases fall due in December. This means that the monies you raise from your November invoicing will be your Christmas cash flow. Suddenly, the actions you take now become so much more important. When you consider that this is your cash, your revenue, your lifeblood, to tide you and your business over the holiday period. December is notoriously a troublesome month. Bills and wages are not the same as in other months. Add seasonal factors such as Christmas bonuses, parties and gifts and suddenly your expenditure is higher than usual.
Couple this with the fact that most businesses close for a period over the holidays and you’re suddenly faced with the perfect storm of having to fund an increased four-week expenditure period while only perhaps having a three-week working period to raise revenue.
Suddenly the actions you take now become so much more important. As both clients and contacts of Direct Route will know, there is no cast-iron way of guaranteeing that an invoice won’t be paid late but there are ways that you can minimise that risk.
1. Make sure that your invoice holds the correct written information. List the customer’s information correctly in full. Make sure that your description of the goods/ services provided is accurate. Ensure that your price is as quoted and that the invoice is dated correctly.
2. List on the invoice the payment information the customer needs to pay you. Make sure that your complete bank details are listed in plain sight on your invoices, to include your bank name, sort code, and account number. Also include your payment terms and most importantly, the date upon which your invoice falls due for payment.
3. In December, have a ledger to hand to see what invoices are owed…. and action it. Remember, in most cases, businesses will only be trading for three weeks in December. You must be proactive with your ledger collections and don’t delay when an invoice is overdue. No matter who the customer, if the invoice is fair and valid, it deserves to be paid. If you don’t have a plan to action for your debtors, or struggle to implement your processes, then don’t delay, use your complimentary BPMA membership benefits and contact us for all the help, advice and guidance you’ll need to enjoy a stress-free end to 2019.
You can contact Direct Route on 01274 223190.