Help! I am facing a January cash flow crunch

Hi Aunty B,

I hope you had a merry Christmas but mine was full of worry. I’ve been working on some cash flow projections for January and it looks like we are going to have some serious issues.

I know from previous years how much cash flow drops away early in the new year and our sales this last year just aren’t as strong as in the past. I’m feeling a bit paralysed. Is there anything I can really do?

Not Merry,
Sydney

Dear Not Merry,

Would it cheer you up to hear that I am actually very proud of you? It’s great to hear that you’ve actually done the hard work on cash flow projections, because there will be plenty of SMEs who haven’t and they really should.

But I can sense your pain and know you want some practical advice, so here’s what to do.

Head down to your bank manager to wish them a happy 2016. Talk through your January issue, explain that it is a short-term problem and discuss an overdraft or some sort of funding arrangement.

Tell your bank manager that you’ve taken steps to get cash in the door early by offering discounts for early payment (you’ve done this, haven’t you?) and show him your business plan and budgets for the upcoming year.

The banks don’t want to start the new year facing mountains of bad debts any more than you want to shut your doors. You need each other right now!

Be smart,

Aunty B

This Aunty B was originally published on December 6, 2011