Most of us look forward to the festive period as a time for fun, relaxation and spending time with loved ones, but if you are a business owner, it’s not always so carefree, especially this year.

Christmas can bring its own challenges for entrepreneurs and business owners, especially when it comes to cashflow, regardless of a global pandemic.

However, worrying about cashflow does not have to be on the top of your list this Christmas, with a little bit of preparation, planning and help from the elves (or, at least, your employees) you should be able to tackle all cashflow challenges, leaving you to enjoy the festivities.

Identify your business situation

With everything going on this year, Christmas 2020 is definitely not going to be the same as previous years, for any business, regardless of your industry or company size.

For many businesses, such as those in retail, the busiest time of the year requires more time and effort being made with extra demands and stress on your shoulders.

However, for other small businesses, such as those in manufacturing, it can be one of the quietest times of the year, which can result in a dip in profits at a time when employees and bills still need to be paid.

From buying more stock, hiring more employees, or renting out more warehouse space, it can help to sit down and budget for the festive period.

When budgeting, include any potential cashflow issues that may occur, such as having to pay staff wages earlier than normal, the loss of trading to bank holidays and annual leave, alongside likely fluctuations in customer orders.

Once you have all that information, you will be able to predict if you are likely to experience cashflow issues in the new year and make plans for how you might be able to overcome them.

Reasons for cashflow slowdowns

Time management

Maybe you had such a busy run-up to the festive period that you didn’t have time to create a cashflow forecast.

Bill breaks 

If your suppliers or clients had a Christmas shutdown or were on annual leave, you are likely to have not invoiced them, so when it comes to Q1 2021, cashflow will most likely be affected.

Additional expenses

Some of the additional expenses which may be incurred during the period include additional holiday pay for employees, virtual Christmas parties and employee bonuses thanking them for their hard work during the pandemic.

Pressure to pay

While you’re chasing payment from others, your own creditors might put you under pressure to pay early, ahead of the Christmas break.

2021 expenses

HMRC requires pre-November and December compliance returns with payments being made in January. Alongside that, credit card payments may also be due before the end of the year.


With every issue, comes a solution to help your businesses overcome the cashflow situation.

As mentioned above, preparation is key.

One of your aims should be preparing a budget for the next three months, covering everything from expected sales, profits and any outgoing expenses, no matter how small that may be.


If you’re struggling to pay suppliers, the best thing to do is communicate the issues to them and set up a payment plan, instead of getting to a stage where you are not able to pay at all and might have to stop trading.

Move with the times

This year has forced us all  to get with the times, with digital solving so many problems. You should certainly look into offering the option of online payments and alternative payment methods, opening up a new route for getting cash moving in and around your business.

If you’re trading in the real world, upgrade your card machines to allow contactless payments to be made. You don’t want any obstacles in the way of making money.

Sources of funding

Here are just some of the main short-term funding options available:

Short-term loans

A short-term loan can help you cover the Christmas period. There are many business loans available that cover a short period of time, which could be invested in boosting seasonal demand or cover a possible decrease in profits.

Business credit cards

If you need quick access to cash to cover a dip in income over the Christmas period, a business credit card will allow you to borrow a certain amount of money on an interest-free basis.

As with every credit card, interest rates can be excruciatingly high, but if you are in the position to pay it off, it’s the best way to get access to quick money and at the same time can help increase your credit score.

Overdraft options

Business overdrafts usually come with a limit, which is usually in line with your monthly revenues. Maybe you won’t need the full amount but knowing you have that in the bank allows a little weight to be lifted from your shoulders.

Overall, the most important thing to learn is that preparation is key to avoid the festive hangover.

At James Scott, we can ensure you are prepared for the changes ahead. Speak to us about any cashflow problems you may have.