The holiday season can be an expensive time for business owners. Between payroll, bonuses, inventory, marketing, gifts, and year-end expenses, more money may be leaving your business than usual.
We help business owners keep their books organized and understand what is coming in and going out so they can plan ahead and avoid cash flow surprises. Here are a few ways to manage your cash flow during the holiday season:
- Plan for holiday expenses. Make a list of additional expenses you expect, such as employee bonuses, seasonal help, inventory, marketing, gifts, and holiday events.
- Plan for bonuses and time off. If you plan to give employee bonuses, account for those additional payroll costs ahead of time. Also consider employee and owner time off, holiday closures, and fewer working days that could affect your income or productivity.
- Collect unpaid invoices. Review outstanding customer invoices and follow up on overdue payments. The faster you collect money owed to your business, the more cash you have available for upcoming expenses.
- Review upcoming bills. Look ahead at payroll, vendor bills, credit card payments, loan payments, and other expenses. Knowing what is due can help you avoid a cash shortage.
- Review your inventory. If you sell products, look at what you already have before ordering more for the holidays. Too much inventory can tie up cash that you may need elsewhere.
- Set aside money for taxes. Remember, not everything in your bank account is available to spend. Make sure you are setting aside enough for upcoming tax payments and talk with your tax professional if you are unsure how much you may owe.
- Plan your cash flow ahead. Estimate how much money you expect to receive and how much you expect to spend over the next few months. This can help you identify potential cash shortages early and make adjustments before they become a problem.
The holidays are busy enough without worrying about your business finances. A little planning now can help you protect your cash flow, stay organized, and start the new year in a stronger financial position.
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