Christmas shutdowns and Cashflow

Managing Cash Flow Over the Christmas Shutdown: A Holiday Survival Guide for Businesses

As the festive season approaches, your businesses will be preparing for a much-anticipated and in most cases much needed Christmas shutdown. While the holiday break offers a well-deserved rest for employees, it also brings unique challenges for cash flow management. With a combination of reduced operations, late payments, and unexpected expenses, many businesses face a cash crunch during this time.

But like most thing with careful planning and proactive strategies, you can weather the storm and enter the New Year with healthy financials. Here’s your guide to managing cash flow over the Christmas shutdown.

1. Forecast Your Cash Flow for the Holiday Period

The first step in ensuring a smooth cash flow over the holidays is to forecast it. You cant manage what you do not know. This means assessing your expected revenue and expenses for the period leading up to, during, and after the Christmas shutdown.

Key things to consider in your forecast:

• Revenue dips: Many businesses see a drop in sales as customers wind down for the holidays. This can be particularly true for allied health business, where clients may pause appointments while they themselves celebrate the holidays and travel to see family or go on holidays. You should expect fluctuations that could significantly affect your cash inflow leading into Christmas and of course for revenue to be non existent while you are closed.

  
  

• Outstanding invoices: Be proactive about collecting any overdue payments before the holidays begin. Clients will be busy over this period, which could delay payments. Sometime all it takes is a phone call to collect outstanding payments.

  
  

• Fixed and variable costs: Make sure to account for any fixed expenses like rent, utilities, or software subscriptions, as well as any seasonal costs like employee bonuses, holiday marketing, or additional salary if leave loading applies to your employees.

  
  

Once you have a clear understanding of your cash flow, you can determine whether you need to take any actions, such as reducing expenses or securing a short-term loan to cover the quiet period.

2. Communicate with Your Clients and Suppliers

The holiday season is a time when many businesses and suppliers also close for extended periods, so communication is key. Let your clients and suppliers know your operating hours well in advance.

• Client expectations: Send out a notice about your holiday schedule, including when your business will be closing and when they can expect services to resume. For clients with ongoing needs, ensure that they have appointments booked for when you are open again helping bring revenue back up to pre close levels faster.

  
  

• Supplier management: Contact your suppliers ahead of time to confirm holiday schedules. You may not need all services over this period e.g. can you pause your cleaning while your are shut.

  
  

Clear communication will help set expectations, avoid delays, and ensure your business stays on track.

3. Control Discretionary Spending

During the holiday season, it’s tempting to splurge on end-of-year bonuses, gifts, or additional marketing initiatives. However, if you're not expecting a significant cash inflow, it’s important to keep spending in check.

Here are some areas to review:

• Cut back on non-essential expenses: This might be the perfect time to pause or reduce unnecessary costs, such as subscriptions, services, or discretionary purchases. Focus only on what’s absolutely necessary to keep your business running.

  
  

• Consider early payments for discounts: If your suppliers offer discounts for early payments, and you have the cash to do so, it could help you save money in the long run. However, don’t jeopardise your cash flow by paying for items you don’t need immediately.

  
  

• Delay major investments: If you're planning on a large investment or equipment purchase, consider pushing it back until after the New Year when your cash position is stronger.

  
  

By making conscious spending choices, you can conserve cash to ride through the holiday season.

4. Create a Temporary Cash Reserve

Ideally, you've been thinking about this all year and should have a cash buffer for slow periods like the holidays. If you don’t, now is the time to build one, even if it’s only temporary.

• Build your cash reserve before the shutdown: If you’re anticipating reduced revenue, try to set aside some extra cash in advance. This will provide a cushion to cover operating expenses like wages, utilities, and other overheads once you resume business after the holidays.

  
  

• Use short-term financing options: If you don’t have a cash buffer and are concerned about a cash shortfall, consider securing short-term financing, such as a business line of credit or a small loan, to cover any gaps. Just be sure to weigh the interest costs against the benefits of having cash on hand. If you were onto this early enough you will have had the chance to negotiate better terms with your lenders.

  
  

5. Monitor Your Cash Flow Throughout the Holiday Period

Cash flow management doesn’t stop once you’ve set up your plan. It's essential to keep an eye on your financials throughout the holiday season.

• Review cash flow regularly: Regularly track your income and expenses to ensure you're staying on track. Make adjustments if necessary to avoid running into financial trouble during the shutdown. You may monitor cashflow monthly but for Late October through January it may be prudent to monitor this weekly or daily, especially if your unsure of the adequacy of your cash reserves.

  
  

• Keep your team informed: If you're operating with a skeleton crew, make sure the key staff members understand the financial situation. They can help monitor cash flow, manage critical tasks, and assist with decision-making in your absence.

  
  

Managing cash flow during the Christmas shutdown doesn’t have to be a stressful endeavour. With proactive planning, clear communication, and the use of smart financial strategies, you can ensure your business stays solvent and ready for a fresh start in the New Year. Whether you’re forecasting, reducing discretionary spending, or taking advantage of busy lead up periods, the key is to be prepared and flexible in your approach.

By taking these steps now, you’ll be able to enjoy the holiday season without the financial worry – and hit the ground running when business picks back up.