Don’t let cash flow be the Grinch that stole your business’s Christmas cheer

Business owners are facing mounting cash flow challenges this festive season, warns Grow Capital CEO Gus Gilkeson. Over the past 12 months, these concerns have surged, driven by rising costs, subdued consumer demand, and a record spike in B2B payment defaults.

“We’re seeing businesses that have operated for 20 to 30 years without borrowing suddenly needing a line of credit because cash flow has become a serious issue,” says Gilkeson.

With many financial services professionals preparing for their December and January breaks, he stresses that identifying cash flow needs now is critical to starting 2025 on the right foot.

Why cash flow management matters most now

“Cash flow is always important, but it’s especially critical at this time of year,” Gilkeson explains. “Yes, it’s a busy period with plenty to organise before Christmas, but prioritising your financial health should be at the top of the list.”

He advises business owners to ask themselves tough questions:

• What cash reserves are available?

• Do you have an accessible line of credit, or do you need to arrange one?

• Is selling an asset before Christmas a viable option?

• Are you prepared for a worst-case scenario?

“Decisions need to be made now,” Gilkeson urges. “If you need to engage a lawyer for due diligence, lodge something in court, or consult an auditor to satisfy lending requirements, these steps take time. Combine that with the holiday break, and you could find yourself cash-strapped well into January.”

Practical steps to optimise cash flow

Gilkeson offers straightforward strategies to address cash flow challenges:

1. Optimise your cash flow

Cash flow forecasting tools can help analyse scenarios and prepare for potential downturns.

“What if sales drop by 5% or 10%?” he asks. “What if payment terms extend from 30 to 90 days? Running these projections allows you to plan for the worst. If things go better than expected, you’ll have a financial buffer.”

2. Don’t wait

“Delaying difficult decisions only worsens the situation,” Gilkeson says. “If you wait until lenders are on break, you could end up with limited options and a suboptimal deal.”

3. Learn from the past

Reviewing last year’s performance can highlight trends and help inform better cash flow projections. This historical data can be invaluable for contingency planning.

4. Maintain open communication

“Strong communication with staff, clients, suppliers, and stakeholders is key,” Mr Gilkeson advises. “Keeping everyone informed ensures that critical details aren’t overlooked.”

The bottom line

Mr Gilkeson’s message is clear: tackling cash flow issues head-on before the holiday season can save businesses from a rocky start to the new year. “Understanding your financial position doesn’t have to be difficult. A little preparation now can make all the difference,” he concludes.

For more expert advice and insights, read the print edition of AccomNews HERE

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