Holiday breaks are a time to re-charge for the year ahead. However, for some business owners, holidays can be a stressful time for cashflow.
Have you got the strategies in place to ensure you are in the best financial position this year? Tradies Tax can help!
Holiday breaks are a chance to recharge for the year ahead – especially after the year we have had. We look forward to warmer weather and finally setting up an out-of-office email for the break. However, for business owners, this time can be stressful without careful cash flow planning.
Even if you do continue to operate through the holiday season, your customers’ financial behaviour may not remain the same.
The strategies and tips shared below are generalised; however, Tradies Tax are here if you need to budget and prepare a cash flow forecast.
Why Is Cash Flow Planning Particularly Important This Time of Year?
Staff leave needs to be covered in addition to your normal fixed overheads like rent, creditors, and tax compliance. The budget and forecasting process ensures you know your numbers and are prepared. If you are closing the business doors for a bit for a break, you won’t be driving revenue during this period and sales may take time to get started again in the new year.
Here are some simple strategies that can help
- Decide your holiday break dates – Once finalised, ensure you confirm these dates with staff, customers, and suppliers. This makes the planning process easier.
- Budget and plan for annual leave – Remember that pay rates may be higher than standard hourly rates, and factor in statutory public holidays e.g., Christmas Day, Boxing Day, New Year’s Day etc.
- Decide on employee pay – You need to decide on if you are going to pay out leave in full at the beginning of the Christmas break or continue to pay as per usual throughout the break.
- Review your work in progress (WIP) – Make sure you plan to complete jobs or services that can be invoiced and paid before Christmas (remember if you don’t invoice and get paid before Christmas, you may not see the money until mid to late January).
- Capacity planning – There is often a rush to get everything done before Christmas, so make sure you have the capacity to maximise on this. Be realistic about how much you can get done vs. the number of employees you have that can help with this.
- Stocktake – Do you need to order in goods now to be able to complete work in progress? Check that there is enough stock on hand available. It is important to ensure you have enough stock leading up to the Christmas period, as shipping/delivery time frames are often delayed due to the high influx of orders placed, so it is crucial you get in early.
- Make an arrangement with the Tax Office – If you find yourself in a position where you cannot make payments, it is possible to apply for an instalment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. You can talk to us about this option.
Talk to Tradies Tax if you need assistance with cash flow planning
If you can’t make ends meet, now is the time to organise short term financial relief. Christmas is a time to relax with family and friends – and we want you to be able to do that.
Tradies Tax can help with implementing strategies to better protect your business – such as cash flow planning, to help keep you on top of your game this Christmas period.
Contact Tradies Tax today!
This blog was originally published by BOMA, but has had edits made by Tradies Tax for the benefit of our readers.