As the end of the year approaches, many business owners need to focus on maximizing liquidity to ensure their companies are in great shape for the new year. Ignoring this can lead to cash flow problems, making it tough to pay bills, invest in growth, or handle unexpected expenses. Here’s how you can keep your cash flow healthy as you wrap up the year.
Planning for Holiday Slowdowns
Many businesses experience a slowdown during the holiday season, but that doesn’t stop fixed cost expenses from depleting your bank account. It is important to plan ahead by determining your cash requirements. Where possible, adjust your operations and managing expenses carefully during this period. This might involve scaling back on inventory purchases or temporarily reducing staff hours to match the slower pace.
Boosting Collections
Getting paid on time is crucial, but with many businesses either shutting down for a long period over the holidays or working night and day through their busiest time of the year, getting your invoice paid may take longer than usual. Consider offering customers small discounts for early payments or setting up late fees to encourage timely payments. Make it easy for them by accepting various payment methods and using software to automate reminders and follow-ups. The easier you make it for customers to pay, the faster you’ll see cash coming in. See also – Five Simple Mistakes to Avoid When Collecting Unpaid Invoices.
If you’re a business that has manual invoicing, be sure that it is delivered to your client in a timely manner.
Negotiating Supplier Payments
When it comes to suppliers, a little negotiation can go a long way. Ask if they offer discounts for early payments—many do, and it can save you money. Alternatively, see if you can extend payment terms without straining the relationship. It’s all about finding a balance that keeps your cash flow steady while maintaining good supplier relationships.
Being Strategic with Contract Renewals
Before renewing contracts with suppliers for 2025, take a close look at the terms. Are they still working for your business? This is a great time to renegotiate terms that better suit your current cash flow needs, such as adjusting payment schedules or securing better pricing, without sacrificing what your business needs.
Cutting Out Waste
Take a critical look at your operations and identify areas where you can cut waste. This might mean reducing excess inventory that ties up cash or finding more cost-effective ways to operate. If December is a quiet time of year for your business, use the time to review your business as you head into 2025. Use data and forecasting tools to help make decisions that won’t hurt sales but will free up cash. See also – Business Overhead Costs: When and Where to Cut When Sales are Slowing.
By taking these steps, you’ll ensure your business has the liquidity it needs to navigate the end of the year smoothly and start the new year strong. With a little planning and strategic action, you can keep your cash flow healthy and your business thriving.
