Christmas can either represent boom time or downtime for your business. As a result, business planning is essential to ensure the organisation is well placed for the new year.
Debtors often attempt to start postponing payment until the new year. Accordingly, there should be a strong focus on debtor collection before Christmas to ensure the cash flow is available for January and February.
The lead up to Christmas is also a good time to review staff annual leave entitlements, particularly if the business is going to be quiet in January. It is your opportunity to run down accrued annual leave liabilities of your employees.
Whilst many small businesses are willing to accommodate staff requirements, it is equally important to recognise that accrued leave liabilities are a future cost. As such it is better to deal with them on an on-going basis so they don't accumulate and become a significant problem. There is no benefit to you if an employee comes to your business in six months and asked to take off two months of accrued annual leave at once.
Stock management is also critical at this time of year, particularly if you are involved in retail. Watch stock closely and ensure it is minimised by Christmas.
In other businesses, it may be a time to make sure that stocks are in place, so when the business returns to work in January, production can commence immediately rather than waiting for suppliers to return from holidays to commence stock deliveries.
Your cash flow also must be prepared for the festive season as many businesses do trade at a loss over the Christmas period – particularly the month of January. Cash reserves need to be in place. This may also lead to a focus on generating sales between now and Christmas to ensure that there is adequate cash coming into the business.