Managing cash flow in the workplace can be tricky, especially when it comes to seasonal businesses. Not only do you need to keep a close eye on your numbers, but you also need the know-how to effectively implement strategies to minimise the risk of profit loss.
If you’re a seasonal business owner, take a look at our top four cash flow management tips and start putting plans in place for a profitable bottom line all year round.
Know your expenses – and plan for them accordingly
Being able to effectively plan for your quieter periods will alleviate the stress of business operations, while enabling you budget smarter for your entire year.
Just like any business, managing cash flow in a seasonal business requires you to have a solid understanding of all operational costs. Identify your peak and slow seasons, and start looking at your historical data to get an accurate idea of expenses and revenues on a monthly basis. This will give you a better idea of putting together a realistic forecast, while avoiding overestimating revenue during your peak season. Additionally, be sure to include fixed expenses such as rent and utilities, as well as variable payments such as insurance, tax and any other expenses that are made on a quarterly basis. If you’re operating a new business, you may have to rely on industry research and competitor analysis to put together your business forecasting plan.
Get paid on time
Every business suffers when their customers don’t front up when payments are due. For seasonal businesses, this can be particularly painful.
Consider incorporating an electronic payment system, whereby your customers have the option to set up regular payments directly from their account. This ensures stable cash flow for your business year round, whilst enabling your customers to continue using your services, building up long-term loyalty.
Giving your customers incentives such as discounts for prompt payments is another tactic to consider, in order to increase your likelihood of consistent cash flow and potentially even increase it - even in quieter periods.
Have a cash flow budget
To keep cash flowing in a seasonal business, you need to have a cash flow budget in place whereby your cash inflow is maximised, while minimising outflow (aka costs). Do your research with lenders and suppliers before purchasing any equipment or material for your business, repair before replacing anything and consider delaying any major upgrades to your business until you’re in a financially stable state.
To increase your cash flow, consider regular inventory checks and sell any outdated or obsolete equipment or products that are taking up space in your business, costing you more money than they are making. Deposits on purchases over a certain amount or for large and custom orders is also another means to maximise your cash flow – this minimises the risk of profit loss due to customers backing out of their purchase, or having to take reduced payments upon final transaction.
Use technology to your advantage
With the world of online business offering you the opportunity to earn more and spend less, seasonal businesses have a greater opportunity to continue their growth and increase profitability all year round. On your quieter periods, consider implementing online marketing initiatives for increased brand awareness, so when peak season arrives you’ll be front of mind for many potential customers.
Additionally, operating with an online business payment system offers you the opportunity to cut overheads in terms of business operations. Streamlining finances with automated regular transactions and electronic invoicing minimises the need for manual labour, meaning you save money while cutting the time needed to chase and balance accounts.
If you’re ready to start getting down to business, contact Ezidebit today. As Australia’s number one non-bank payment provider, Ezidebit can help your seasonal business balance the books, get paid on time and streamline your cash flow management. Enquire now.