Ignition blog  /  How to manage your Christmas cash flow
Average days to payment over the holidays extends to 38 days, here's how to bring yours down to ZERO
2 mins 02 Dec 2019 by Belle Mifsud
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As everyone begins to wind down for the year, it can be tempting to take the same approach.

But will you be relaxed when January comes around and you’ve come to find a stack of outstanding invoices?

Many businesses find themselves under economic stress during the holiday period. Research shows the principal cause for cash flow challenges are overdue invoices.

With 47% of invoices settled past their due date*, the problem of late payments is widespread.

This worsens during the holidays, taking an average of 38.67 days in January and 37.22 days in February*.

As Christmas draws closer, your window for getting paid tightens. So take action now to avoid any stresses in the New Year.

Check out our five tips for managing your Christmas cash flow:

1. Communication

Communication with your customer is key to avoiding late payments. The truth is, everyone is in a similar position so this will make conversations easy and relatable.

By re-engaging with your client base now, you can discuss your respective schedules over the next few weeks and take into account any important dates that might be disruptive.

Be transparent with your collection schedule so they can prepare for this on their end.

It’s easy to fire off an email, but calls will be more effective. You’ll find that people are typically more responsive after a chat.

2. Move to automatic payments

If you’re not already using Ignition to process all your payments, now is the best time to set this up for all your clients.

During the holidays, people are busy with events and can easily get distracted. Automatic payments are the easiest way to get your invoices paid on time.

It’s a win-win situation:

  • Your clients won’t have to take time out to dig up their invoices and make a payment.
  • You won’t have to worry about bothering them to chase up late payments.

And with automatic reconciliations, you can just set and forget.

3. Set a clear process

If you have been inconsistent with your collections process in the past, you need to regain control and let your customers know your preferred payment process.

For this to be effective, you’ll need to be clear with your communication of outcomes and to highlight the mutual benefits for each party.

It’s also essential to minimise the steps on your clients part to ease the transition process.

Looking to migrate your client base to automatic payments? Contact accountmanager@ignitionapp.com and we can set this up for you.

4. Triage your client base

Some clients may be taking advantage of the quiet period, by setting off during their office closure dates.

It’s important to know which clients are closing down shop early so that you can prioritise these follow-ups. It’s also handy to line up a secondary contact to follow up with if invoices become overdue.

You should also look at last years trends and identify clients that are perpetual late payers. Reach out to these clients first and create a plan rather than be reactive.

5. Create a schedule for incomplete work

While it’s important to ensure you’re getting paid - it’s also equally important to ensure you’re on track with your deliverables at the end of the year.

Take check of your incomplete work and let your clients know what is outstanding. Be transparent and offer a timeline for when the work will be complete.

This can help you with your conversations around payment as your clients can see the effort you’ve taken to adhere to your agreement.

Need more help managing your Christmas cash flow? Contact accountmanager@ignitionapp.com and we’ll be in touch to create a plan for your unpaid invoices.

*Xero Small Business Insider: Late Payments Panel

Meet the author

Belle Mifsud

Account Manager (APAC)  Ignition

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Published 02 Dec 2019 Last updated 28 Oct 2022