The festive season — a time of joy, celebration, and, unfortunately, potential tax headaches. As you gear up for the holidays, consider these tips to ensure you and your business don't end up with a tax hangover come the New Year.
Tip 1: Embrace the Festive Spirit
'Tis the season to celebrate your team's hard work and achievements. Recognise their efforts, fostering camaraderie that lasts beyond the holidays. A motivated team is an invaluable asset to your business.
Tip 2: Create a short team Cashflow Forecast
December isn't business as usual for anyone. The festive season can impact your cash flow, irrespective of your industry. Create a short-term cash flow forecast, spanning December to February. Update it weekly to catch potential shortfalls early and strategize accordingly.
Tip 3: Keep an eye on your Tax obligations
Don't let the merriment distract you from tax obligations. Factor them into your cash flow forecast. With the Australian Taxation Office tightening its grip on tax debt, staying on top of obligations is crucial. The looming BAS return in late February should be on your radar.
Tip 4: Chase Debtors Wisely
Collecting payments during the festive period can be challenging. Review your payment terms, and if clients are lagging, a gentle reminder may be in order. Keeping a close eye on debtors is essential for maintaining financial health.
Tip 5: Revise Payment Terms
The New Year is a good time to reassess payment terms. If your terms are currently at 30 days and you are suffering from a delay in cash flow, consider shortening them to 14 days. Evaluate client relationships and decide if serving clients failing to pay promptly is worth the effort.
Tip 6: Nurture Supplier Relationships
Transparent communication with suppliers about potential payment term extensions can ease cash flow strains. Take advantage of early payment discounts where possible. Saving money here can provide a much-needed boost.
Tip 7: Strategise for Ongoing Cash Flow
Thinking beyond the festive season, adopt practices that support continuous positive cash flow:
- Invoice promptly after completing a job.
- Facilitate easy payments, offering discounts for early settlements.
- Postpone significant purchases until the New Year.
- Monitor inventory closely, converting slow-moving items into cash through post-holiday sales.
- Explore debtor financing for immediate cash injection.
Tip 8: Make These Tips Year-Round Habits
While these tips are crucial during the festive season, incorporating them into your year-round financial strategy ensures sustained positive cash flow. Stay proactive, stay mindful, and watch your business thrive. Cheers to a financially healthy New Year!
Related: 'Tis the Season, to be weary for Fringe Benefits Tax!
Have you noticed our #FridayExpertTips... here's one that relates to Fringe Benefits Tax
"If the proposed legislation to make electric and plug-in hybrid cars exempt from Fringe Benefits Tax (FBT) is passed, all employers should consider offering their staff the ability to salary sacrifice a car to reduce employees' tax. Get in touch to learn more."
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