Covering your costs and thriving as a seasonal business is rewarding but difficult work. Managing seasonal cash flow can be a tricky and stressful aspect of your business operations but there are steps you can take to raise your ability to handle seasonal sales. We will explore some cash flow improvement strategies to help guide you through the up and down cash flow process.
Seasonal Cash Flow Basics
As a business owner, you’re keenly aware of the need to keep cash moving through your business and having the ability to access money when needed. Being aware of your seasonal cash flow and maintaining sensible business plans is probably second nature to you but it is good to track the following:
- Create an appropriate budget that covers all your expenses
- Be aware of all the expenses that your business is exposed to
- Generate cash forecasts using all the details at your disposal
- Know what costs can be eliminated or reduced
Awareness of these factors can help you track the cash flow patterns of your business and allow you to make better decisions and plans. Moreover, planning is a necessity and not planning is the biggest mistake businesses make when it comes to cash flow. Take the time to ask hard questions and fully understand your business.
Swift Cash Flow
Sending out timely invoices is key to generating cash so make sure you develop the habit of posting an invoice after every sale is made or services have been rendered. Being consistent in your timing will help establish your reputation as a serious organisation. Promptly follow up with clients who fail to pay on time even when they are a larger business as you want your cash flow to be steady and rapid. Consider offering payment options as well as discounts to clients who settle early and routinely.
Expand your options
Consider what other services you can offer clients to minimise the impact of seasonal cash flow and create steady year-round income. Think about what your core business is and ways to expand it that keep in line with your brand. Perhaps that means setting up an online store that allows purchases to be made at any time or maybe offering creative uses of your services. Study what your clients need and see how you can contribute to meeting their needs throughout the entire year.
Keep money in reserve for those difficult times you know will eventually occur. Having a cash reserve is a wise step for small and medium-sized businesses to take. Consider leasing instead of purchasing equipment and only paying for rental space when you would actually use it. Communicate with business accountants to learn about how to protect your assets and ways to increase savings.
Strength in Relationships
Examine who you are paying, what suppliers you work well with, and see how you may save money with them. As you build a strong relationship talk about potential discounts for large orders or securing better terms for orders over a long period of time. You may be able to get more favourable terms for those times when you have less cash.
Tracking your Stock
Honing your inventory skills over time can lead to your business keeping more cash available for bills or emergencies. Plan ahead and aim to purchase stock that will sell and not lay idle in your warehouse. Keep a watchful eye on stock levels and be creative about cycling out old stock, for instance, consider selling goods at a discount at the end of a season. Taking charge of your inventory can lead to having cash on hand during slower sale’s months.
Optimise your Downtime
Use the off-season to plan for the future and take time to think about improving your business. Talk with your team members to seek their input as they may provide insight into saving you money or improving your services. Refuse to be comfortable with the status quo and look towards making steady improvements over time.
Looking for more ideas?
Small and medium businesses are always looking for ways to manage their cash flow and if it begins to be overwhelming the professionals at Taggart & Partners are here to help. We’ve been providing accounting solutions to businesses for nearly a decade and are committed to making a difference for our clients. Please call us with any questions on 07 3391 1188, e-mail us at email@example.com or get in touch online for help with any cash flow issues.