Will your pudding be from the top or bottom shelf this Christmas?
As consumers get into the Christmas spending spirit, it's generally a great time of year for retail businesses. However, when it comes to wholesale, manufacturing and other business-to-business industries, the Christmas cash flow crunch can be tough. For many businesses, the Christmas period can be a cracker, whilst for others it can be a near death experience; the pain of which is now felt over an extended period.
This year, it was September when I started seeing signs of impending festivity going up in the shops and my wife reminded me that I had become one of those grumpy old men. The problem is, the traditional 12 days of Christmas are now very much a thing of the past and the Christmas period now spans over 100 days of making ends meet.
In North Queensland, this near death experience is extended by our wet season, resulting in a traditionally quieter and slightly moister January compared to other locations around Australia. This means that, for many, the “Christmas Period” is now 120 days or more of pain, requiring a significant level of tightening of the belt at a time when one often needs to ease out a notch or two.
So, if you typically invoice your clients, then you need to plan your cash flow carefully and be proactive in chasing your debtors. Chasing the payment of invoices is not the most enjoyable job in the world, let’s face it – a root canal procedure is more enjoyable for most people. But it's vital if you are to survive the Christmas cash flow crunch. But how do you do it without being the Christmas Grinch?
It comes down to 2 words: Expectation Management. This is ensuring that the expectations of your clients are in line with the expectations that you have. So you are all on the same page.
The main thing to do is to ensure that your client is never surprised by your bill, they are already expecting it before it arrives and have already planned how to pay it. When this happens it is easy to talk about more flexible payment arrangements if required and the good relationship is maintained. Through clear 2 way communication, expectations of both sides of the transaction are managed.
If you do surprise your client with your invoice, then expectations have not been created and things can get more difficult. “Billing by ambush” has the potential to breakdown a good client relationship.
So get talking now to your debtors before we enter our 12 Days (Multiplied by 10) of Christmas…
Feel free to call us on (07) 4052 0800 to discuss how this may impact your business.