Christmas can wreak havoc with your cashflow, as I’m sure you know, and that’s because several things are all hitting you at once:

• Between your staff, your customer and your suppliers, you can be losing up to 2 weeks of real trading, and inevitably December is often a low sales month.
• Staff usually get paid up to 10 days earlier than usual; for some reason they want it before the end of the month to buy presents and stuff.
• Customer orders can drop off in December as they plan for their shut down, and minimise purchases to help their Christmas cashflow.
• If your staff take extra time off in December this could affect output.
• Lower sales in December will affect your cashflow straight away if you use invoice discounting; otherwise it’s going to hurt in January and February.
• Sales invoicing may be delayed if your accounts department don’t get it all done before Christmas. Delay in invoicing means delay in getting paid.
• If customers usually pay you around the end or start of the month you’ll find they may not turn up until the first or second week of January.
• Some customers will use the Christmas break as a reason why they haven’t paid you yet.
• January can often be a slow sales month as people get over the break, which will compound the December effect.
• November VAT return? Your VAT will be due early January. Have you got it in the cashflow?
• March year-end? Then you’ll have corporation tax to pay on the 1st of January too.
• And don’t forget those personal tax bills due in January; do you need any extra dividends to cover them?

So what can you do about it? In one simple word – PLAN.

• Have a really good look at your 13 week cashflow forecast (you DO have one, don’t you?) Has it got realistic customer receipts, have all of the points above been factored in?
• Start building up a cash buffer now, to tide you over if things get tight later.
• Review your debtor report right now – make extra efforts to get any old debts in, and keep late payers on a tight leash. These are the ones who’ll use any excuse not to pay you after Christmas.
• Identify any key customers whose payments you rely on. Have a conversation early on about when they’ll be paying you over Christmas. Get a commitment to pay you on time if you can.
• If you use invoice discounting, check you won’t have any concentration limit issues if key customers pay you late.
• Make sure all invoicing is kept right up to date, and all invoicing must be done before the break.
• If you need to, speak to your bank early if you need some help over Christmas – they’ll need a forecast to show why you need help and when you’ll be repaying it. If you start planning now you’ll be able to take the stress out of your Christmas cashflow and maybe even relax a little over the break!