The accountant’s playbook: helping your clients manage cash flow at Christmas

Modulr By Modulr on 23 November 2021   •   4 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >The accountant’s playbook: helping your clients manage cash flow at Christmas</span>

The last quarter of the calendar year is the busiest trading period for lots of businesses. That includes hospitality and retail, with the former being kept busy for Christmas parties and the latter needing to purchase stock up front to meet gifting requirements.

The heightened demand puts pressure on business cash flow, especially when there’s temporary staff, warehouse space, and inventory to pay for. Managing cash can be challenging in normal circumstances, but it’s even more tricky during the festive period, with many companies only being able to turn a profit during those months.

When you throw into the mix supply chain issues, pent up demand from lockdown and repayment of COVID loans, 2021 certainly provides its own unique set of challenges for cash flow management...

Follow our tips below to help steer your clients towards success during this critical time of year. 

Use inventory management software

Businesses that sell physical goods get invaluable use from cloud inventory management software, simply because it gives them that all-important real-time visibility of their stock. It enables them to optimise purchases to carry enough to meet demand while also avoiding the risk of holding excess stock with cash tied up, which can be difficult to sell.

Third-party add-on tools, such as Unleashed, integrate directly to Xero and Quickbooks and synchronise data to update stock movement regularly in accounting software without needing to be manually entered. 

This saves time, and real-time visibility on stock in accounting software helps keep sales timed perfectly without needing to part with cash unnecessarily.

That’s not all - inventory management software also provides visibility on best-selling products. So, not only do businesses get a heads-up on what they need more of, but it also puts them in a good position to negotiate lower prices or extended credit terms - which is where the expert advice of an accountant can be helpful.  

Upgrade your payments technology

Businesses selling goods on credit, such as those operating in the B2B space, are more likely to feel the cash flow strain as demand heightens. Because of that, it’s a good idea for accountants to work with their clients to ensure suppliers and other business costs are only paid just as they fall due. 

Payment solutions like Modulr’s Payments Dashboard can help with this as it’s connected to the Faster Payments network. Unlike Bacs, which settles payments in three days but ties up funds through the payments process, Faster Payments clears within 90 seconds - even on bank holidays and weekends. That means bills can be paid at short notice, so cash is kept in the bank for longer, bolstering balances.

On top of that, the Dashboard - which integrates with IRIS, BrightPay and Sage - makes completing the payables and payroll workflows more efficient by managing them from one centralised destination. This reduces data entry and makes reconciliations easier. 

Go Cashless

Taking payments in cash is inconvenient and time-consuming. It requires clients to regularly bank takings and creates a delay to funds being banked.

Encouraging clients to implement EPOS systems, such as Square or Zettle, allows payments to be taken electronically and funds are reflected in bank accounts faster, increasing balances in the shorter term.

The limit on contactless transactions recently increased from £45 to £100, so consumers paying for purchases are more likely to be keen to pay this way in the future.  

Implement cash flow forecasting and credit control software

Powered by inventory management software, the efficiencies from real-time data will make it easier to leverage EPOS systems and the Payments Dashboard to get more accurate estimations of cash flow forecasts and outstanding bills.  

Even better is if you can also connect cash flow and credit control tools, such as Satago, Fluidly and Futrli to accounting software - these help accountants advise businesses on how to better manage their working capital by gaining insights into future potential cash shortfalls.  

Accountants can help their clients deal with identified cash issues in advance by suggesting improvements to working capital (i.e. negotiating extended credit terms with suppliers and reducing credit terms with customers). If these efforts aren’t sufficient, they can recommend funding solutions. 

Seek finance

If a business’ cash flow issues are more deeply entrenched, accountants should work with their clients to help them access debt funding to tide them over for the longer term. 

There are lots of tech-enabled solutions on the market that integrate with accounting software, but accountants should also consider working with online finance marketplaces, such as Swoop Funding, Capitalise, and Funding Options, because they’ll help facilitate their clients’ access to the widest possible range of funding options on the market.

For example, retail businesses looking to purchase stock upfront might need fixed-term loans. In contrast, companies selling online might be better off with revenue finance - it’s a more flexible solution with repayment values tied to future sales. 

Another benefit of accountants partnering with online finance marketplaces to secure finance for clients is that these brokers work with alternative lenders who can access funds for successful applicants more quickly than high street banks.


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