Australian businesses are being warned to prepare for cash flow challenges this Christmas with an increase in unpaid invoices, rising inflation and staffing shortages.
Internal data from funding solutions provider OptiPay shows the average SME is waiting on average 38 days to be paid and this is likely to be compounded by staff shortages, holidays and supply chain issues exacerbated by lockdowns in China.
“Business owners need to make sure they have a plan in place to manage seasonal fluctuations, extended hours and an increase in activity,” he says.
“The Christmas holiday period is a critical time for businesses to be on top of their cash flow.”
Mr Sedgwick’s top tips for maintaining cash flow at Christmas.
Create a Cash Flow Forecast
The best way of predicting the future is to look to the past. What happened last year at Christmas time? When were the seasonal peaks and what were the expenses and payments you encountered then? It’s vital to have a realistic forecast so you won’t underestimate or overestimate the cash you’ll need during the holiday season. Knowing when your cash inflow and outflow are the highest can help you set aside a cash buffer earlier in the year.