Capify urges businesses to prepare now to avoid a 2020 New Year financial hangover

With just five days until Christmas and 12 until the new year, we’re officially entering the quiet trading period for many Australian businesses. 

After all, school holidays have started and that means many Australians will be taking the opportunity to head home, travel interstate or fly off overseas for the summer holidays. 

Even with workers away, many businesses won’t be shutting up shop altogether though.

But with lower customer volumes and slower than usual speeds from accounts departments, cash flow can become a real headache over the holiday period, putting a strain on paying wages, bills and invoices.    

So with the new year fast approaching, is there anything Australian small businesses can do to make sure they avoid a cash flow headache in the new year? 

Online business loans provider Capify has provided five handy tips to help businesses navigate the holiday period and start 2020 on the right track.  

Compare business loans - rates updated daily

Search promoted business loans below or do a full Mozo database search. Advertiser disclosure.

Refine the list of business loans

Let’s help find you a great business loan...
  • Business+ Unsecured Loan

    A simple way to fund your business’s big plans. Borrow up to $50,000 without using your assets as security. A fixed interest rate means your repayments don’t change over the life of the loan. Apply in minutes with the Business app. Enjoy a fast approval process. $495 establishment fee.

    Interest Rate
    Upfront Fee
    Funding speed
    Rates range from 11.95% p.a. to 22.95% p.a.
  • Unsecured Business Loan

    Business Loans from $5,000 to $2,000,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.

    Interest Rate
    Upfront Fee
    Funding speed
    On Application
    3%, starting at $399
    from 3 hours
  • Unsecured Business Loan

    A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.

    Interest Rate
    Upfront Fee
    Funding speed
    from 9%
    Within same day

Capify’s 5 tips to avoiding a financial hangover 

1. Look at the past to plan the future 

According to Capify most Aussie businesses will encounter seasonal peaks and troughs throughout the year, so the good news for established businesses is that they can plan ahead using past experience. 

“Look back through your sales and payment history over the last few years and look at when you can expect cashflow to become tighter.” 

“By knowing when your revenues are at their highest and lowest you can set aside funds to ensure you have enough cash in reserve for the quieter times. That allows you to budget for the quieter and busier times appropriately.” 

2. Tighten your belt

With many employees out of the office on holiday over the Christmas and New Year period, Capify suggests that it just makes sense for businesses to reduce or pause a number of common expenses. 

“You can reduce your costs over the quieter times by looking at what expenses you can cut over the holidays. For example, you can suspend services like Netflix in the office, newspaper deliveries and other recurring expenses so you're not paying for things you won't use.”

“You may even find your recurring costs for cloud-based IT services can be scaled back if systems aren't being used at the same level.”

3. Look at billing frequencies

Unfortunately, the new year can often coincide with annual bills or subscription renewals coming in, which is why Capify advises businesses to think about spreading these bill costs over the year, where possible, instead of getting whacked by one-off payments at an unideal time.

“Although the default for many bills is quarterly or annual, there are options for shifting to monthly or weekly billing cycles. So, instead of dreading a $5,000 quarterly power bill, you can move to a $1,700 monthly bill. That way, when cashflow is at its lowest, you won't be hit with massive bills.”

“Similarly, you can also reconsider your own billing processes and think about shortening your payment terms to get funds paid into your accounts before the holiday break.”

4. Explore financing options

While reducing costs is one strategy, small businesses could also look to additional funding to help improve cash flow over the holiday period. 

“If you have a good relationship with your suppliers, you may be able to establish an account with them so that you can make bulk payments for products and services. So, while you continue to purchase goods, you can pay for them later. This will help when your cash balance might be low but you need to get back to work after the summer break.”

“Another option is to take out a loan with a trusted finance company, like Capify, to help bolster your balance while income levels are lower than normal.” 

5. Ramp up your marketing 

If possible, Capify also recommends that businesses take a proactive approach to customer shortfalls by ramping up marketing. 

“In the lead up to the quieter weeks, you can invest some time and effort into marketing. For example, you can contact customers that might have fallen away recently to make them a special offer for products or services over the summer.”

“You can also create special offers for existing clients and use the quieter times to establish marketing and business development plans for the new year so you're not caught out next year.” 

RELATED: 5 killer business lenders taking on the banks in 2019

Ready to turn your 2020 business ideas into reality with the help of some extra funding? Don’t miss the hot business loans (including Capify’s) in the table above, or for even more offers make your way over to the Mozo business loan comparison hub

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.