The Payroll Blog

News, tips, and advice for small business owners

Year-End Cash Flow Management Tips

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Stephanie Davis

Entering the holiday season brings a lot of excitement, but also some stress for small business owners. For many, the end of the year is the time to hit peak sales goals. While small business owners plan to see an uptick in sales, they may also run into increases in expenses such as hiring seasonal staff, increased utility bills for being open extra hours, or ordering more inventory to keep shelves stocked. Since this is a big season and you’ll want to have a little extra cash on hand, try to implement some of these steps below if you tend to struggle with cash flow during the holiday season.

1. Incentivize early payments and cash.

Do you invoice clients? Sometimes your clients can take longer than you would like to pay, which can hurt your income flow. Offering an incentive for them to pay sooner can get money into your account quicker and potentially avoiding a cash flow catastrophe down the road. If you have a retail store or have a business that could easily accept cash, offer a discount to customers who pay using cash instead of a credit or debit card. It’s an easy way to get cash in your hands quickly instead of waiting on the transaction delay that comes with using cards.

2. Plan some special offers.

‘Tis the season when every business is offering some type of deal. These offers can do wonders for increasing your funds for the season. With Small Business Saturday approaching in November, it’s the perfect time to offer a promotion for the good or service you sell. One idea to consider is offering a discount on gift cards through a “buy-one, get-one” promotion. You’re offering a great deal to your current customers, and if they pass along the gift, it could bring you a new customer in the future, which is an all-around win-win situation for holiday cash flow.

3. Make smart seasonal hiring choices.

While you may be in an “all hands on deck” situation around the holidays, carefully evaluate your staff before posting a job description online or “hiring” sign in the window. New employees cost money, so you’ll want to make sure you will have enough income coming in to pay any potential new employees. Additionally, you’ll have to be prepared to make onboarding quick, but effectively, since time is going to be limited.

4. Choose inventory carefully.

It’s easy to overestimate what you need when the holidays hit your small business. You don’t want to have too much inventory on hand and have it not sell because that’s just an unnecessary drain on your business and your cash flow.

5. Keep an eye on cash throughout the year.

While year-end is a time that you definitely want cash on hand, lack of funds is what causes many small business owners to close their doors. Staying on top of your cash flow throughout the year will set you up for success year-round and at the end of the year when you’re busy with the holidays and preparing for tax season.

6. Prepare for loans or lines of credit.

Even if you do everything right to keep your finances on the rails, it’s possible that you might need some external help. If you’re thinking that you might need to take out a loan or add a new line of credit, think about how long it may take to get those funds and plan accordingly around your goals. There are many ways you can finance your small business, but some options are better than others when you need funds quickly.

Bottom Line

Cash is king, especially at year-end. With a little planning, you’ll be in a good position to tackle the holiday hustle at the end of the year. If you haven’t been planning, don’t stress! By implementing some of the tips above, you may still be able to see more green, instead of red, in your books this year.