Planning your company’s finances for next Christmas

The Christmas season is usually best spent relaxing and not thinking about work, but if you’re self-employed you will often need to plan ahead in order to achieve this. One of the most important things you will need to plan is your company’s payables and receivables.

Payables: Avoiding late payment fees

Just because your office closes between Christmas and New Year does not mean your suppliers will follow suit. More important still, an outstanding invoice due for payment when your business is closed still needs to be paid by the due date or you could be liable for late payment fees.

You must ensure that payments are either made early, or that you have a system in place that can pay invoices automatically in your absence.

Receivables: Why you mustn’t run out of cash

The flip side of this problem is that your business may also fall victim to late payment by your clients. Overdue invoices have a direct impact on your company cash flow, with potentially disastrous effects if you are unable to meet your financial obligations. You may also find that getting finances back on track in January takes much longer than expected, stretching your finances to breaking point.

Next December you must chase invoices early to ensure that you clear as many payments as possible. Your business could consider offering customers incentives for early payment, helping to keep cash flow healthy.

It may feel a little too early in the year, but putting plans in place now for Christmas 2015 could help you avoid all kinds of financial headaches towards the end of the year.