Small business accounting during the holidays takes some special preparation.
‘Twas the week before Christmas, and all around town,
Every business was busy
We were down.
Is this you today? While this time of year jingles the bells of retailers, for service businesses, it is often one of the slowest. January won’t bring a lot of relief either. The new year starts slow.
The trouble is, this time of year can also be one of the most expensive. Office parties, client gifts, staff gifts or bonuses...they all drain your wallet. How can you continue to spend when the money isn’t coming in as quickly as it usually does?
Here are 3 small business accounting tips to get you through.
- Stay on top of your cashflow.
No matter how slow things get for you, stay on top of your bookkeeping so you know your incomings and outgoings. Maintain a clear picture of the time and costs you have to bill and what work is coming down your pipeline. In other words, don’t get so wrapped up in the fun of spending that you ignore the truth about your cashflow. Financial hangovers are some of the worst.
- Chase late payments.
‘Tis the season to get your money. Get in touch with those who have fallen behind paying you. Keep it friendly, but make it known that you’re ready to process their overdue payment. You can even do this for bills not yet overdue. How? A simple email to clients will do. Start by expressing your gratitude for their business this year, detail your special holiday hours, and then thank them in advance for submitting their payments promptly during the holiday season. In other words, get out in front of it. You should get a good response from this approach.
In the same spirit, make sure you are managing your own bills and creditors this season. Now is not the time to damage business relationships by being tardy with payments. If you are struggling, communicate with those you owe, and see if you cannot come to some sort of payment arrangement.
- Review your terms and payment methods.
If you find things are especially tight, or your payment terms just aren’t working for you for whatever reason, it might be time to revamp them and announce the revisions before the new year begins. For example, for new clients or new projects, you may want to take a percentage of your quote as down payment before you begin work. Or, you may want to reduce your payment timeframe -- from 30 to 14 days, for example. Or, introduce a late payment penalty. Whatever you do, announce these changes in writing, kindly and professionally, to make sure your clients are aware of them well in advance.
Does your website accept payments? It has to. This is, far and away, the best investment your small business can make to ensure on-time, fast, and guaranteed payments. Use these last few (slow) weeks of the year to work with your web designer and add a payment feature to your website if you don’t already have one.
Your holiday season can be a financial success so long as you plan it right. As always, we’re here to help.
From all of us at BGW CPA, we wish you a joyous holiday and prosperous 2018!
What other measures do you take to keep your finances in check over the holiday season?