5 TIPS FOR BETTER CASH FLOW MANAGEMENT DURING THE FESTIVE SEASON

When the end-year holidays arrive, South Africans are ready to spend. According to a recent survey, 41% of South Africans report being better off financially than they were this time last year. The report stated: “Consumers are predicted to each spend an average of R6 326 over and above their usual monthly expenses during the festive season – meaning that in line with Statistics SA’s mid-year population estimates, our national budget can expect a total injection of R252 billion.”

Lots of income and, inevitably, costs, could be coming your business’s way this December. Without a proper cash flow management plan, however, you could lose out on the holiday profits that might just turn your good year into a great one.

cash flow management tips
Carrying out a cash flow forecast will help you determine how much liquid money you need to run your business uninterrupted.

What is Cash Flow Management?

Cash flow management is the process of monitoring how much money is coming into and going out of your business. Having a positive cash flow is a sign that your business is in good financial health since you can cover your expenses and restock as the need arises. We are already in the last month of the year, but it’s not too late to get your cash game together.

How to Manage Your Cash Flows Better

Here are five tips for better cash flow management so you can close your year on a high note.

1. Forecast Your Cash Flow Needs

Will you have enough liquid cash to purchase extra stock and cover rising expenses? Carrying out a cash flow forecast will help you determine how much liquid money you need to run your business uninterrupted.

Cash flow forecasting is the process of determining how much money will flow in and out of your business during a specific period. To forecast your cash flows for the festive period accurately, you should determine:

  • When the festive period begins and when it ends for your business.
  • How much income and sales you expect to make during the forecasting period.
  • Your estimated expenses for the period.

The amount of cash you need to operate your business smoothly is the difference between your estimated income and expenses.

Without suitable software, however, cash flow forecasting is challenging. You have to consider several factors such as past cash trends, expected changes during the forecasting period, data from different stores, and information from various stakeholders. Manually reconciling all the information you need from various sources is taxing.

An intelligent cash management solution can integrate your data and produce reports from various sources and periods for faster and more accurate forecasting.

Learn more about Deposita’s Connector range.

2. Take Action to Avoid Running Out of Cash

If, after your cash forecast, you have a positive cash flow, congratulations. But if your cash forecast shows that you’ll suffer a cash deficit during the forecasted period, take preventative measures. These could include:

  • Using creative ways to market your business on a limited budget like creating viral posts on social media to increase sales and brand awareness.
  • Sending invoices early and several reminders to late payers.
  • Selling older stock at a discount.

3. Reduce Manual Cash Handling to Minimise Theft and Human Error

There will be a lot of cash moving around during the festive season, presenting lots of opportunities for cash shrinkage. The average business loses about 5% in annual revenues, according to recent global employee theft statistics. That means if you’re making R1.8 million in a year, your employees might steal about R90 000 of your revenue – a significant amount.

Employees get opportunities to steal by having easy access to cash and inventory, undercharging customers, among other ways. You need more than security cameras to secure your cash.

It’s no wonder that businesses are increasingly adopting cash and card self-service kiosks to reduce cash handling by employees. Customer self-service also reduces client queues during the busy festive period.

Investing in high-end note validators and cash counters also helps to reduce cash shrinkage from human error.

Learn more about Deposita’s Note Validator.

4. Reduce the Cost of Cash Both On-Site and In Transit

You’ll likely be moving lots of cash around either on-site or in transit during the holidays as business increases. Keeping unnecessary cash inventory at your site can result in high costs such as higher accounting costs and the need for a larger storage capacity. Making too many cash delivery trips to and from your bank will also eat into your cash flows.

You can store an optimised level of cash inventory in your premises, carry out efficient cash in transit, and secure your moving cash by adopting a world-class smart safe. A high-quality smart safe tracks your cash trends and informs your cash stocking and moving decisions.

The use of cash recycling technology is also a growing business trend. Recyclers help businesses reduce the cost of cash-in-transit and conveniently deposit and withdraw cash on demand.

Learn more about Deposita’s Exchangor solutions.

5. Track Your Cash to Maintain Your Financial Health

Even with an accurate cash forecast, sudden unexpected shifts in the business environment can disorient your cash strategy. You need access to real-time data to visualise your sales, costs and cash-in-transit at any one time for prompt decision-making.

An industry-specific end-to-end cash management solution that integrates well with your point-of-sale system can track and manage your cash flows so you stay on top of your cash game at all times.

Discover how Deposita’s cash management solution can help your business.

Get Customised Cash Management Solutions for Your Business

As other people begin to relax into the holiday mood, it’s time to roll up your sleeves and get your cash flows in order because there are profits at stake. Invest in the latest world-class technology to create an accurate cash forecast. Manage your cash flows to avoid cash shrinkage and cash deficit that lead to lost profit and business.

With so many cash management solutions to choose from, you might be wondering what will work best for your business. Our experts at Deposita are here to help you choose an appropriate solution to suit your business needs. We also create customised cash management solutions to ensure you adopt technology that serves you best.

Book a free consultation to talk to us about your business cash management needs today.

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