Christmas Cash Flow Tips for Small Businesses

Christmas is approaching, and many small business owners are finalising the last holiday details so that they can have a well-deserved break from the office. Keeping work-life balance between your business and family responsibilities is essential. But, there are several things of which you should be mindful of and not overlook them if you are planning for a vacation or time off. On top of that, though for most people, Christmas is a cause for fun, celebration, and festivities, but for small business owners, this time of year can bring serious cash flow problems.

The cash flow crisis can be caused by many factors depending on the type of business and the industry it operates. Firstly, some sectors are overloaded with work, receiving a high volume of sales, and increasing payment terms can lead to cash flow shortages affected by supply chains. Secondly, for some specific industries, the Christmas season is the quiet season, and income dries up.

The season will be less stressful with a bit of forward planning, preparation and contingency work that can assist you in identifying tricky spots and meeting the challenges outright. With that in mind, here are a few tips for coping with the cash flow challenges of the holiday season.


It might not feel like an exciting to task to implement but budgeting for your future cash inflows and outflows will help you manage any shortages. It will give you an understanding of the timing when your shortages might happen, and you can start to prepare for them now rather than having to react last minute to the fact that you have the means to pay bills.


Be prompt with your invoices and getting them out as soon as you can, making sure that you send them to the right person and chase up slow payers. Waiting till the end of the month might cause delay in payments and affect your cash flow negatively. Prioritise orders that you can deliver quickly and hold off executing orders that cannot be fulfilled properly until after Christmas.


One of the most effective ways to get some cash quicker is to promote a discount when sending out invoices before Christmas. For instance, some businesses offer their clients a seasonal discount of 2.5 – 5 per cent the total amount if the payment is made by 23 December at the latest. This will guarantee your business is getting cash in hand when you need it most.


In order to meet demand during Christmas, you may need to load up, which can potentially lead to an excess stock thereby locking-up cash. The recommendation here is to record this year’s sales and keep the detailed information so you can be well prepared for the next year and implement it in your purchasing strategy.

Besides, comparing the relative merits of fast-moving products versus slow, it is important to keep in mind that everyone is overwhelmed with choice. These days a large number of customers value a more selective range of products.

The general good cash flow strategy is to order less but more often, so it might be wise to check in advance on how flexible and responsive your suppliers can be. But be mindful of risking running out of this season’s best seller just as supplies get depleted.


Christmas usually comes and goes very quickly, so the best way to handle the holiday rush is to prepare for it well before it starts. Prepare your marketing campaigns, content and communications well in advance. Set up a schedule for the social posts, emails and content for November and December, focusing on specific dates that are most relevant to your customers.


Coping with short-term cash-flow issues is important but to think over your long-term strategy is as equally important. The new year is a right time to revise your business plans and budgets (or create them if you do not already have one.) It is greatly beneficial so next year you might decide yo use different strategies and approach such as negotiating for 50 per cent upfront, shortening payment terms, offering incentives for early payment or penalties for late payment and other methods to make your life easier in the future.

Knowing where to start writing your business plan can be challenging, Planium Pro provides tools to help you to make this process less intimidating and time consuming. The software consists of 4 essentials parts to help you create a well-prepared plan and track your performance.


Running a business can be very demanding and challenging at times so make sure that you use the tools to remove stress and can enjoy the holiday season by ensuring you have managed your cash flow.

Our team at Planium Pro wishes you a Merry Christmas and Happy New Year!

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