Back to Blog
Published at

4 easy tips for managing cash flow during the holidays

Throughout the holiday season’s ups and downs, securing a healthy cash flow for your business can mean the difference between a jolly and a gloomy business owner. 

Maintaining a positive cash flow, in other words, making sure that more money comes into your business than goes out of it, doesn’t have to be a holiday miracle. In fact, managing cash flow can be easy with the right tools and mindset, as long as you follow these 4 time-tested tips: 

Tip 1: Analyze the trends of holidays past in order to plan your present

Nobody knows your business as well as you do, but even years of expertise are no match for cold, hard data. We recommend using software to map out the seasonal ebbs and flows of your business in order to predict its needs on a month-by-month basis. While this has been a much more challenging task during this very uncertain year, you can still determine your core cash needs based on historical data and seasonal sales trends in order to accurately map your cash flow plans and stick to them. 

Tip 2: Learn when to give and when to receive

Paying your bills on time and getting paid in turn are very important aspects of running a business. But do you know what’s even more critical? How these activities are timed. 

Send out your accounts receivable bills too late, and you might not get paid as soon as you’d like. Pay your own accounts payable too early, and you’ll lose out on a safety net of cash that could be used to cover unexpected expenses. Managing cash flows effectively and strategically ensures that money will be there when you most need it. 

One way to achieve that is by incentivizing customers to pay early in exchange for discounts, prizes, or store credit. 

Another great way is to use Melio to schedule all of your payments to make sure you always pay on time (and not a minute too soon). 

Tip 3: Ditch the frills and spend resources wisely

The holidays are an expensive time for businesses, and 2020 is no exception. From employee end-of-year gifts to last-minute CDC-compliance store and restaurant modifications, the art of managing cash flow has become even more unpredictable this year. 

The key to not losing your head is to keep things simple and prepare a budget for the most critical upgrades and costs required to finish the year off right and cut down on unnecessary expenses that can be easily pushed to 2021. 

Tip 4: Use the gift of foresight to secure future financing

Small business loans and business credit are necessary lifelines during a low-liquidity period. If you wait until you need the money to establish a credit line, you risk facing predatory lenders or extra-high interest rates. It’s much better to compare lenders at your leisure and examine different short and long-term options so you can build a portfolio of financing resources that will get you through the seasonal highs and lows of your organization.

Bonus tip: Pay your bills using a credit card on Melio

If you just need a little extra float, you can use your credit card to pay bills on Melio in order to differ payments until your next billing cycle.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.