The holiday season is exciting and stressful, and that’s especially true if you’re a business owner. The way you manage your cashflow during the holidays may differ from other times of the year—and there’s nothing wrong with that. In fact, it’s important to consider the many ways to adjust your approach during the final months of the year.
Here are five tips that can help you better manage your company’s cashflow during the holidays.
This is the most important thing you can do. If you don’t plan in advance, expect to run into issues sooner rather than later. And when you do, don’t be surprised if you’re caught off guard and forced to make quick decisions.
As a general rule of thumb, plan for a holiday season that encompasses the months of November, December, and January. November and December are the two prime holiday months, with January as a time to catch up and ensure that you’re prepared for the year to come.
There’s no way of predicting the future, so you won’t know the exact impact of the holidays on company finances until the time arrives. However, when you take cues from the past, you have a better idea of what the future will bring.
Here are a handful of questions to answer:
The past doesn’t always indicate what will happen in the future, but taking cues will help you prepare to the best of your ability.
The use of cloud-based forecasting software could be the difference between properly managing cashflow during the holidays and making mistakes that put you behind as you move into the new year.
Here are four reasons to use forecasting software during the holidays (and every other time of the year).
There’s a good chance that you already use forecasting software. That’s a good start. Now, it’s time to use it specifically to manage cashflow during the holidays.
You want more money to move into your business than out of your business. This is known as positive cashflow. Conversely, if more money is going out than coming in, you have negative cashflow. And that’s a problem.
As a result of one-time expenses, the holiday season could cause cashflow issues. These expenses commonly include holiday parties, holiday bonuses, and client gifts.
As noted in point #2 above, review past holiday expenses to determine what you can trim this year. There’s nothing wrong with “tightening your belt” if you have cashflow concerns. It’s better than putting the future well-being of your business at risk.
You may need help managing your cashflow during the holidays. It’s better to realize this early than to avoid the facts and hope for the best. There are many forms of financing to consider, including but not limited to:
Compare the pros, cons, and application process of each option to determine which one is best for your business.
Tip: if you’re going to apply for a loan or line of credit, give yourself enough time to complete the process. Starting too late may mean that the funds aren’t made available to you until after the holidays.
While the financing options above are worth your consideration, there’s a problem with each type: you’re borrowing money. Furthermore, you’re paying interest on the balance. This means that you’re actually harming your financial position over the long run.
Invoice factoring is the answer to this problem. Rather than wait for invoices to be paid, forward them to a factoring company for upfront payment. Once your customer pays the invoice, you’ll receive the balance minus a small fee.
The benefit of invoice factoring is that you aren’t borrowing money. You’re simply receiving funds that are due to you, without the wait. This is a much more consistent and sustainable way to manage cashflow.
Other benefits of invoice factoring include:
Even if you’re on the fence, it makes sense to learn more about invoice factoring and the impact it can have on your company’s cashflow. One trial invoice may be all it takes to realize it’s the best path forward.
If you’re ready to take action, REV Capital is here to show you the way. With affordable and reliable invoice factoring, we’ll help you improve your cashflow during the holidays (and every other time of the year).
Apply now to see what “the future of cashflow” looks like.