The end of the year is always here before we know it. With Australians expected to spend heavily again this festive season, now is the ideal time to get ready if you’re a small to medium business.
Recent data shows that almost a quarter of small businesses earn up to 40 per cent of their revenue between November and January, and around 10 per cent earn half their yearly turnover during this period. With this level of financial reliance on holiday trading, careful planning becomes essential.
Below are four strategic areas including cash flow management, inventory control, ATO compliances and cyber security that you should be putting into place now.
1. Cash flow management
Cash flow can tighten quickly over the holidays, especially when customer payments slow down and fixed costs such as rent, wages and BAS obligations continue. This year, 48.7 per cent of Australians say financial pressure has been affecting their mental health and 12 million people say they plan to spend less this festive season. This may result in more cautious purchasing behaviours and delayed payments for small businesses.
To reduce pressure, make sure your cash flow management is super tight by forecasting income and expenses through to February.
It’s a great idea to also follow up outstanding invoices before December. Consider whether early payment incentives or shorter terms are appropriate for your business.
2. Review stock levels
If you operate a product-based business, stock flow can make or break the holiday trade. The rise of major November sales events has changed purchasing patterns, with 55 per cent of Australians planning to buy Christmas gifts during Black Friday and Cyber Monday. This condensed surge can create unexpected spikes in demand, particularly for fast-moving items.
It’s a great idea to review last year’s sales data and assess your current stock levels now. Check supplier lead times, especially if you rely on overseas shipping, and ensure you have enough packaging and fulfilment supplies. Because consumers plan to shop earlier to spread costs, having appropriate stock on hand in November can help you capture sales across the board before the December rush.
For service-based businesses, a similar idea applies. Take a quick look at your workload, check how early clients usually book in, and make sure you’ve got enough staff or subcontractor support lined up. Or if you provide a service that people might put off until the new year, you can cut back on staffing or reassign duties that aren’t client facing.
3. Prepare for ATO obligations
Compliance doesn’t pause during the festive season, and with many businesses operating on skeleton staff, it’s essential to plan ahead. Superannuation for the December quarter is still due by 28 January, and BAS lodgements continue as normal. Late payments or missed deadlines can result in penalties, so identify who will be responsible for payroll, STP reporting and BAS preparation during your shutdown period or staff leave cycles.
4. Check internal controls
This is also a good time to review internal controls. With scam activity rising during busy periods and more transactions flowing through digital channels, implementing approval processes and checking account changes before releasing payments can reduce the risk of error or fraud and improve your cyber security.
The right preparation can protect your business and strengthen your year-end performance this, and every, holiday season. If you need support with cash flow management, inventory oversight or tax obligations, the Piteo Accounting & Advisory team is here to help.
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Disclaimer: It is important to seek the advice of a qualified professional before making any financial or accounting decisions. Each individual’s financial situation is unique, and not all information provided may be relevant to your specific circumstances.
