It’s also, as this business report article on how Christmas can cripple cash flow, points out, one of the most dangerous times of the year to experience cashflow problems.
How peaceful will you be feeling when you see all those unpaid invoices in the New Year?
As well as being a good excuse for mince pies and mulled wine, Christmas is often a time of winding down. The retail sector excepted, many businesses either shut down or operate with a skeleton staff for much of December. On top of that there are further absences due to seasonal illnesses and of course the party season. It’s not hard to imagine the cashflow headache all that is.
No-one wants an overdraft for Christmas and a big pile of overdue invoices to chase come the new year. So, let’s have a look at six strategies to take to make sure you don’t step in to 2018 with a planet sized hole in your bank account.
1. Be prompt when sending your invoices during December
Don’t wait until the end of the week or month to send your invoices. Send them as soon as you’ve done the work or sent the goods. The sooner your customers have them the quicker they can process them.
Many businesses have specific payment run dates. They are likely to bring them forward during December. If you don’t get your invoice to them before the cut-off date for processing you won’t get paid.
Be clear with your payment due dates and make it clear that all you want for Christmas is to get paid on time.
2. Follow up invoices to ensure receipt
A quick courtesy call lets you know they are being processed.
Use this call to find out what your customer is doing over the Christmas period and when their payment runs will be.
Are they shutting down? Are key people – e.g. the person who pays the invoices – taking any annual leave? Who will take care of things in their absence? Get dates, names and contact details.
If it looks like no-one will be in the office to pay your invoice when it’s due, broach the subject of early payment.
3. Suggest payment by BACS
If your customer usually pays you by cheque then suggest a BACS payment this time.
They can schedule it in advance. That way they don’t need to feel they are losing out by paying you early.
4. Chase payments before their due date
You need to put extra effort into chasing your debtors at this time of year. The closer you get to Christmas the more difficult it will be to get hold of the person who makes the payment.
The prime time for taking annual leave is always the two weeks either side of the Bank Holiday. If your invoices fall due during those two weeks be sure to start chasing for them in plenty of time before hand.
Don’t be afraid of reminding your customers you expect timely payment. Having regular contact will remind them you exist and need paying. And your invoice is more likely to get processed before Christmas.
5. Push back requests to delay payment
When chasing for payment you may get requests from some customers to extend payment terms until early January because it’s their year-end on 31st December. They want to boost their figures for their year-end accounts by keeping your money in their bank account. Unless there is something in it for you, such as an interest payment, then why should you sacrifice your cash to make them look better?
6. Pay your suppliers on time
If you have payments that are due over Christmas be sure to do as you’d be done by. Make sure you pay your suppliers on time. If this means paying them a bit earlier see it as a Christmas goodwill gesture and an investment in your supplier relationships.