Festive, Restive or Pensive? Your Business at Christmas Time

Historically, the December quarter is the largest quarter of economic activity in Australia. Many industries experience their peak sales at Christmas time including retailers, the information & communications sector, accommodation and wholesalers.

Other industries slow down around Christmas time including manufacturing, agriculture, education and real estate. A December 2018 study produced by the Westpac bank indicates over a third of businesses experience no significant change over the festive season and feel the Christmas period isn’t a make or break period. Some businesses including professional services regard the end of the financial year as the most important time of the year.

The festive season can be a tough time for small business owners because they sacrifice the chance to relax and wind down, miss sleep due to extended working hours or have limited cash flow. With only a quarter of Australian businesses experiencing their busiest economic quarter, that leaves three quarters struggling to cope with low seasonal demand for their products and services, staff absences and disruption from their suppliers.  Most importantly, Christmas can be the toughest period for cash flow which might mean you struggle to pay suppliers and staff particularly if the slow trading period extends into January and February. The Westpac Report indicated that 30% of small business owners would sacrifice their own salaries to pay staff and 40% of businesses would experience late payment of their invoices.

Here are some tips on how businesses can stay on top of their cash flow at this time: -

Accounts Payable and Receivable

  • Ensure invoices are promptly issued to customers (and sent to the correct person)
  • Offer as many payment options as you can - cash, credit card, EFTPOS etc.
  • Re-negotiate or establish favourable payment terms
  • Monitor your debtors and chase payment where customers are outside your terms
  • The ATO report that the costs associated with invoicing can be reduced by 70% through e-invoicing
  • Pay invoices on time, not ahead of time
  • If your business is seasonal, make sure you put some funds away to prepare for the tougher times

Stock and Supply Ordering

  • Carefully monitor your stock and supplies and avoid over ordering and carrying excess stock leading into a quieter sales period. Avoid locking up your cash with excess stock and supplies
  • Re-visit your sales and stock levels from this time last year - forward planning is critical. Take into consideration if your suppliers have a close down period
  • This may be the time to call it a day on any dead stock and utilise it as giveaways, hampers or donated to charities
  • Christmas and New Year might represent a chance to offer bundles or extra discounting on any slow-moving stock
    FremantleMedia [Public domain]

The Price is Right?

Although retailers will be in a rush to stock up for a seasonal upswing, it’s important to take the time to assess whether your pricing strategy is right. Again, looking at last year’s records will be important to examine: -

  • What was last year’s low margin biggest seller? Can you increase that margin this year?
  • Have your costs increased this year and have prices been adjusted to reflect those increases?
  • Last year’s least popular items? Were the margins too high? Drop the price?

Wishing you all a safe, happy Festive Season and a Prosperous 2020.


This article forms part of our Business Accelerator Magazine. Download the latest edition HERE or browse other articles from this edition below: