Preparing for the Christmas rush

We are now just four weeks out from Christmas, one of the busiest trading periods of the year, which means things are hectic for Australia's SMEs! But, given the ongoing turbulence that continues to impact businesses around the globe, Australian firms are pleased to be heading into the holiday period with high expectations for sales and profits.

Our Business Expectations Survey for the December  quarter 2012 shows that sales expectations have reached the second highest level in eight quarters and the profits index is at the highest level over the same period, and although it's pleasing to see executives' confidence returning and expectations rebounding solidly, it's important to remember that if the festive season isn't managed effectively, small businesses can find themselves in cash flow strife in the New Year. Conversely, for the firms that get it right, Christmas is a great time to seize sales opportunities, expand the customer base and ultimately grow market share.

Importantly, the difference between success and failure is simple - you need to have systems and processes in place which allow you to fill orders (quickly if required), get your invoices out the door and get your cash back in a quickly as possible. This means chasing accounts the day they become overdue because the longer a bill remains outstanding the less likely it is to be paid.  For small businesses this is particularly critical as they often don't have significant cash reserves at hand to prop up late paying customers.

There is no doubt that it's not easy to successfully manage cash flow at this time of year. A small business needs to buy stock and materials, and pay wages, often before receiving payment for orders. However, SME's that are successful in juggling the cash flow will reap the rewards. 

The following tips will help SMEs to survive the holiday festivities:

1. keep the cash flowing by securing enough funding to finance increased orders

2. minimise bad debts through an established credit assessment  procedure

3. tighten invoice terms and conditions so customers are clear on payment terms

4. follow up on invoices promptly and continue to chase payment when necessary

5. review supplier's terms and, if required, negotiate credit terms or shop around for better deals from other suppliers

6. stock up to cater for all possibilities and talk to suppliers about 'sale or return' deals

7. establish a deposit policy for work in progress

8. use short term cash surpluses wisely, don't keep them in accounts that don't pay interest


Connect with us to receive updates throughout the day:

Like us on Facebok Follow us on Twitter

Dun and Bradstreet AustraliaTop of page Dun & Bradstreet Australia Pty Ltd 2015 | D&B Small Business    *About Us    *Sitemap    *Advertise    *Privacy    *Terms & Conditions