Christmas Planning: Managing Business Cashflow - Act Now!

With the Christmas period fast approaching, businesses should be thinking now about their cashflow funding requirements over the holiday period.

For business operators who typically need to arrange additional accommodation on your overdraft or working capital facility at this time of year, you are NOT the only one!

Banks get inundated around this time of year with requests from their business customers for temporary increases in overdraft limits.

And for business operators, it can be a highly stressful experience, so plan ahead and get in early!

Make it easy for yourself by making it easy for your bank. Help them to give you the outcome you require, as quickly and easily as possible:

• don't just ask your bank for an arbitrary amount, and then ask them what information they want from you.
• prepare an estimated weekly cashflow, showing expected revenue receipts and payment outgoings on a week-by-week basis - roughly until mid-January, or whenever you anticipate cashflow returning to normal.
• provide copies of your most up-to-date management or draft financial statements (P&L and B/S at a minimum).
• provide copies of your current aged debtors schedule and aged creditors schedule.
• and then most importantly, put some written narrative around those numbers.

Provide your bank with a plan that they can then support.

The information and funding request should clearly show how much of an increased limit you'll need, why you need it, how long you'll need it for, what the funds (increased limit) will be used for, and how the temporary facility will be repaid.

Help your bank to help you!