The five most common problems businesses hit over Christmas: How are you looking this festive season?

Welcome to our email series, offering you tactical advice and strategies to manage your business and finance through to the festive culmination of 2022.

While Covid travel restrictions have eased, businesses are experiencing continued challenges with rising fuel costs, interest rate hikes, supply chain issues, staff shortages and depressed demand for services or products. Despite this, according to our SME Growth Index, SME confidence is growing and it’s important for businesses to be aware of the additional seasonal challenges ahead all of which can all be navigated with some careful planning.

We highlight several challenges still ahead for businesses over the upcoming holiday season, which can all be navigated with careful planning.

Here’s our top five traps to look out for before the festive season arrives.

Slow debt turnover

The Xero Small Business Insights Special Report on cash flow revealed half of all payments made to small businesses are late, costing businesses $1.1 billion dollars a year in Australia. This tardiness becomes more pronounced over the holidays.

Overtrading risks

The temptation to increase stock levels is high if you sell goods over the holiday period. If you end up with excess stock it could end up being out of season and leaving your cash flow crippled.

Inventory Management

Inventory management can become difficult for everyone involved during the holiday season, including manufacturers, suppliers, retailers, and even employees. This is because the holidays are a busy time, and consumer demand fluctuates constantly.

Christmas sale culture

It is essential to know your profit margins before discounting stock for sales (or if the market forces you to do so). For example, when a company offers a discount of 25 per cent, its gross profit margin is 30 per cent, and it requires a 5000 per cent increase in sales volume to maintain that margin.

Review funding arrangements

With the cost of doing business, including sharp rises in fixed term effecting small businesses more than larger businesses lending according to the Reserve Bank of Australia, it’s a good time to investigate whether your funding arrangements will sustain you over the festive season.

The chances are that most small businesses will be impacted by at least one of these Christmas period challenges. Make sure you give yourself the best chance of ending 2022 on a high note by utilising our cash flow forecast tool to help predict expenses and manage your finances with ease.

We can’t wait to keep you up to date with the latest tips and trends, so look out for more insights delivered to your inbox in the weeks ahead.

Until then, don’t hesitate to drop us a line if you have any questions or concerns about these common challenges and we’d be more than happy to help.

Feel free to contact us for anything that relates to your business finances so we can help with your success.

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