A recent survey by accounting software company Xero found 28% of the businesses it surveyed did not have any provision in place for a cashflow problem and a third did not know if they would survive an extended period of tough trading. Another 34% did not know what they would do in tough cashflow times.
One in two small to medium size business owners had gone without pay and 17% used their personal credit cards to solve business cashflow problems.
The Christmas holiday period is often a time when businesses can strike cashflow problems not only is there a period when sales are likely to drop but their clients are more likely to take longer to pay their invoices on top of this you may well have GST and provincial tax to pay in January.
Businesses should try and plan at least two – three months ahead this includes having an income / expenditure cashflow budget, ensuring you have your invoices out well before Christmas and be proactive in following up any overdue invoices.
Don’t be afraid to seek advice / help from your Accountant, financial business advisor or bank and if you are having problems with slow payers employ a debt collection company to help you recover the unpaid invoice(s).