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Can You Take A Christmas Break And Keep Your Cash Flow Working At The Same Time

background 20126 1920As the year closes to an end, it is every business owner’s dream to welcome 2016 with a big bang especially in terms of finances. This is why setting priorities before the year ends can help you with your financial forecast. For months of doing the number crunching and analysing where your business is going, it is high time you take a break so you can meet the challenges and adjust the direction of your business. However, if cash flow is not available to fund your efforts, your growth targets for 2016 will be impossible to meet.

Trade payments have the tendency to slow down during the holidays and this is going to be an issue for business owners as untimely trade payments can leave businesses struggling especially when it comes to meeting fixed costs. As a result, New Year plans are instantly forgotten. Taking a holiday is a good thing, so long as your cash flow does not also take a holiday.

Depending on the business you own, the holiday season can either bring you financial luck or deny you of healthy cash flow. The main challenge for most businesses is ensuring that payments are received in a timely manner. Unfortunately, this is beyond the businesses’ control. There can be times when payment collection process is slowed down because customers are busy planning for the holiday. Payments are often made in January, but this could affect your supposed steady cash flow. 

Businesses need to be mindful of strategies so Christmas cash flow crunch can be minimised:

Review your previous cash flow experience: it is easy to obtain a detailed cash flow forecast if you already have an idea of your cash flow experience in the past. This way, you can prepare in advance and formulate plans that can protect your business when cash flow starts to slow down.

Make collections your top priority: Before the holiday season kicks in, make sure you have already issued invoices so customers will have time to prepare payments and you can also follow up on those who have not lodged their payment yet. Giving customers timely payment reminders and overdue notices can reduce the risk of not receiving any payments during the holiday season.

Keep your stock in check: It can be difficult to control inventory levels during Christmas but you can still put unsold stock to better use by selling them cheaply so you can continue to meet on-going expenses.

Establish a backup: A steady cash flow helps you survive the season and to maximise your cash flow, make sure you reserve your cash into a high interest savings account.

Tighten your payment terms: You can also improve seasonal cash flow by testing your payment terms. You can either offer early payment discounts to encourage timely payments or negotiate full or part payments ahead of time.

Seasonal bumps are inevitable, but they can definitely be controlled with some effective strategies you can use such as managing unpaid invoices and fixing expenses with the use of debtor finance. While taking a well-deserved holiday is a good way to start fresh, you can throw your worries away once you are assured that your working capital is still intact.

Record Keeping in a Shoebox - You need Help!

Is your mind as cluttered up as the pile of receipts in your table? Do you find it hard to keep a record of your financial transactions due to juggling multiple tasks at the same time? For any business, a bookkeeper is essential because they help you keep things organized especially if it has something to do with dealing with numbers. You might be spending too much time trying to remember the transactions you made on a single day, but due to the tasks at hand, getting everything organized may be such a hard thing to do. If you have a fledgling business, you may consider keeping receipts very trivial. However, you will come to appreciate its importance in the long run. This is because the receipts serve as a way to track the progress of your business. It gives you a clue for tracking your progress. Without receipts, how would you go about preparing your financial statements?accounting 57284 640 

The role that a bookkeeper plays cannot be underestimated. If you used to set aside the importance of a bookkeeper in your business, these situations may just change your mind: 

• You need to look for receipts for a specific transaction.

For minor or major transactions, receipts serve as proof that the transactions have really been made. These receipts are kept for good reasons. In the future, you will need to prepare financial report which includes all of the financial endeavors you have pursued. Without the receipts, there is no proof that the transactions have taken place. However, if you have a bookkeeper, the receipts and other important files you will need for preparing a financial statement are intact. 

• You need to prepare your tax returns.

Preparing all the necessary documents for filing your tax returns is often easier said than done. It cannot be carried out by an extremely busy person with limited time at his disposal. It is either you miss out on completing the essential documents or you are going around in circles as you have a lot of things in mind. When you have a bookkeeper to do the job, everything you need for the process to be smooth sailing is going to be achievable. 

• You want a complete report of your deductible expenses.

It is easy to make a mental note of your expenses, provided you do not have any important matters to attend to. Unfortunately, a business owner has a lot of things to do aside from preparing financial statements. A bookkeeper will help ease your worries by ensuring that you back up your deductible expenses.

The time you spend for all of your back-end activities will be significantly reduced if you use a bookkeeper’s service. You can also save money without necessarily cutting corners and as a result, your purpose of keeping track of every cent is not defeated. Any technicalities involved in bookkeeping will be properly addressed. At the end of the day, your business goals are achieved and the quality of work is not compromised. Your business can also go the extra mile as you have already set your bookkeeping worries aside.

­ Questions? Give Andrew a call 0450 605 592