Post Christmas Cashflow Crunch
As a small business owner myself I have been there done that and have the T-shirt to prove it.
Welcome Back ?
The month of January and February can be tough on cash flow, due to close down with no turnover, annual leave and statutory payroll, November GST paid on the 15th January, December creditors due 20th January along with the credit card purchases from November/ December now falling due.
Looking forward consideration needs to be given to upcoming February financial commitments such as normal overheads, January PAYE due 20th February & December/January GST due 28th February.
It can be easy to feel overwhelmed now which can be compounded with sadness that recharging your batteries during the break are quickly being drained again.
Here are a few tips and ideas to consider:
Prepare a cash flow forecast
A simple spreadsheet is fine, with expected revenue and expected outgoings for the next 2 months. Include as much as you can, be totally honest and allow for drawings to cover your personal needs too. It is great to be able to add a column to show expected bank balance at the end of each row.
Study your cash flow forecast
Spend time studying your forecast, is there anything you can change ? Remember knowledge is powerful, rather than worrying about money if you can acknowledge where you are at, then you can do something about it.
If you have a cash flow shortfall be proactive rather than reactive. Contact suppliers and Inland Revenue to make arrangements, call your overdue debtors to encourage payment.
By addressing cash flow you are freeing up time to focus on turnover and strategy in your business.
Do your bit
Be kind by understanding if a debtor asks for a payment arrangement as well as pay your creditors on time.