The Christmas season brings a lot of opportunities for businesses but also requires a fair bit of spending. There’s inventory to stock, events to prepare for, and corporate gifts to send out. Depending on the volume of demand, you might be covering for overtime or temp workers. Just as in our personal lives, with gifts to give and parties to plan, expenses can quickly get out of hand.
Given that, it’s important that businesses take precautionary measures against excess spending during the holidays. Just as you might make a plan for buying presents and pitching in to parties, it’s important to prepare your company’s budget to ensure manageable, realistic Christmas spending.
First off, remember that your budget isn’t something set apart from the rest of the year. You might make some special considerations for Christmas, but keep in mind the larger context. For instance, do you you want to get business expenses done before the year-end? Or wait for cash flow to stabilize? Decisions on your December budget will have effects long into the following year.
Speaking of Cash Flow
The holidays can be a tumultuous time for cash flow. Pooling your resources for extra inventory or staff becomes even more difficult when customers are lax with their payments.
Take some time to review your payment terms before the holidays start, especially if you rely primarily on subscriptions or installments for income. Make sure to send invoices as early as you can—you just might head off other payments your customers are scrambling to meet.
That said, you might also want to consider alternative terms of payment around this time of the year. For some items, you might want to require pre-order fees, deposits, or payment on delivery. These can also help save time following up on delinquent customers.
It’s also a good idea to know what funding options you have to cover for any extra expenditure you might need. These can serve to cover unplanned expenses or, alternatively, they can allow you to increase your budget without introducing needless uncertainty. After all, extra spending can be a good thing as long as it’s well thought-out.
Consider Invoice finance and asset-based lending, for example. Invoice finance allows firms to access up to 90% of an invoice’s value soon after its issuance. The lending amount increases with the value and number of invoices you send. Asset-based lending is a business loan secured by inventory, accounts receivable and/or other balance-sheet assets. It’s particularly attractive to businesses that need extra funds for supplies or material—better than working below capacity or failing to meet demand.
Of course, Christmas isn’t the same without a celebration, so rather than skip the festivities altogether, try for something more modest. You could even take the usual Christmas budget approach by planning your party with an event budget template. There are a number of ways to reduce expenditure, from the venue to the food to corporate gifts. After all, what matters most during Christmas is the cheer and goodwill among you, your employees, and your clients.
If you’re in need of more help when it comes to optimising your business for profit, get in touch with the experts at Easdowns today! We provide business and financial advisory services to help you maximise the potential of your business, achieve your goals and secure your financial future.
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