Unless you’ve steered an SME through the treacherous waters of December and January, few people will understand the pressures business owners experience during the festive season. For everyone else, it’s a joyous time of the year filled with celebrations and downtime on the beach. For entrepreneurs, it can be far from merry. Here’s how to prepare your business and end the year strong and confident.
For many companies across South Africa, it’s standard practice to shut shop over the holiday period and give employees time and space to enjoy the festive season. Billing cycles – particularly for larger firms – are moved up to the middle of the month to finalise admin and process payments before school is out. Unfortunately for SMEs that miss this mid-month payment run (and heavily rely on their invoices getting paid to cover costs), payment is delayed until business resumes in mid-January. It compounds the not-so-festive anxiety around cash flow that is so common at this time of year. What’s more, once businesses shut their doors in December, it’s nearly impossible to get hold of anyone qualified to expedite payments.
According to recent research by global fintech platform Intuit QuickBooks, SMEs can see, on average, around eight invoices go unpaid between now and Christmas Day. Unpaid invoices not only leave the recipients short during one of the most expensive times of the year but also have a significant knock-on effect on the rest of the supply chain. If you are not getting paid, chances are your suppliers aren’t either.
Waiting for payments can bring cash-lean companies uncomfortably close to the edge.
Successfully steering the ship through the festive season requires good planning and a bit of goodwill from your clients or customers. Get started by creating a cash flow forecast based on historical income and expenses. Understanding your cash flow needs is key to getting ahead of any gaps in your working capital. Carefully review your plans for the next two months and, where possible, delay any large purchases to preserve your cash.
If your customers or clients are larger companies that have been in business for a while, chances are they understand why SMEs need certainty in the run-up to the holidays. Where possible, invoice early and explain why it’s important that your bills are paid on time. This is also a fantastic opportunity to wish your clients or customers well for the holidays, share your plans for the coming year, or ask how you can better serve their needs going forward. Consider offering early payment incentives to make your request more attractive, and don’t forget to follow up with payment reminders. It’s an extremely busy time of year, and emails are more likely to fall through the cracks.
Despite the added financial strain, the holiday season can be a very lucrative time for certain companies. If you haven’t yet, now is the time to finalise your holiday promotions and make sure your business is poised to claim its share of the spending spree. Stock up and reserve funds to restock and optimise your sales in December and January.
Finally, apply for business finance to boost your cash flow ahead of the festive season snag. Genfin’s Opportunity Bridge Loan is ideal to tie you over until business resumes in January and enjoy a stress-free December. Apply to release up to R5 million with a 90-day repayment grace period. That means fast access to capital with no premiums apart from a single, once-off repayment after three months.
“Brilliant service, super-fast reply. I would definitely recommend Genfin to any SME that needs quick funding.”
Here’s what South Africa’s SMEs say about working with Genfin. Read reviews
Enjoy the convenience of a 100% online application process that takes no more than five minutes. Get started with only 12 months’ bank statements and receive feedback in only 24 hours. We understand that the festive season can be remarkably stressful for our country’s SMEs. That is why your cash flow needs are our top priority. What’s more, our transparent and flexible terms mean you always know where you stand.
With Genfin, you are always in safe hands.
Release up to R5 million with a 90-day repayment grace period.
