As September rolls in and summer memories start to fade, it’s time to turn our attention to something more pressing: year-end cash flow planning. While the leaves haven’t yet turned, now is the ideal time to prepare for the financial demands that the year’s end inevitably brings. Waiting until November to start planning is a mistake that many businesses, unfortunately, make—one that can lead to unnecessary stress and financial strain.
In my 25 years of experience, I’ve seen far too many organizations leave this crucial task until the last minute, and the results are rarely favorable. Why scramble to resolve payment issues and negotiate terms when you can take control now? The financial world rewards the proactive, not the reactive.
Forecast Your Sales Early
Start by evaluating your upcoming sales pipeline. What deals are likely to close before year-end? Are there any opportunities to accelerate sales or offer incentives for early payment? Understanding what cash will flow into your business over the next few months is the cornerstone of your planning.
Negotiate Credit Terms Now
If you’re planning on negotiating credit terms with suppliers or customers, now is the time to do it. Why? Because if you delay these negotiations until October or November, you run the risk of extending the payment cycle right into the new year. Imagine a situation where a payment term of 60 days is taken from a late-November agreement—this could push your cash receipts into January, missing your year-end targets entirely.
Resolve Unresolved Queries
Unresolved billing or payment queries are a silent threat to your cash flow. If these are not addressed promptly, they could delay payments well past your intended timeline. I’ve seen countless businesses face year-end cash flow shortages simply because they failed to resolve disputes early enough. My advice? Implement a process today to tackle these issues head-on. The sooner they’re resolved, the sooner the cash is in the bank.
Plan and Execute
As with any successful strategy, the key is not just in the planning but in the execution. Develop a detailed plan for managing your cash flow and stick to it. Allocate resources where they’re needed most, and ensure that everyone on your team understands the importance of hitting year-end financial targets.
Train and Focus Your Collections Team
Your collections team plays a pivotal role in ensuring your cash flow remains healthy. Now is the time to make sure they’re well-trained, focused, and equipped with the right tools to negotiate payments effectively. They need to ask the right questions, understand your customers’ payment processes, and be persistent yet professional. A well-prepared collections team is your best defense against cash flow issues as the year draws to a close.
In conclusion, don’t wait until November to start thinking about year-end cash flow. Start today. The best way to ensure a full bank account in December is by taking action now. As the old adage goes, “An ounce of prevention is worth a pound of cure.” In finance, this couldn’t be truer.
By planning ahead, negotiating terms, resolving disputes, and ensuring you have a strong collections team in place, you’ll be in the best position to end the year on a strong financial note.
