Summer Holidays for Your SME Finances

Summer holidays can put a lot of pressure on your SME finances. Not everyone goes on a summer break at the same time, but sometimes it feels like they do. While some are recharging their batteries with a much-needed break, there are others still at work, but having to manage additional stresses and strains caused by people being away.

Small business owners can find summer holidays tough for several reasons, because they represent a break with the flow. Two common problems are, firstly, when things go all too quiet and the orders dry up; and secondly, at the opposite end of the spectrum, when there’s a massive sales rush to cope with.

The first problem centres on cash-flow, while the second usually involves managing your staffing levels and your production capacity.

Image representing summer holiday season for SME for an article explore how small and medium businesses can manage their finances, cash flow, and productivity when staff, clients and suppliers are on summer break. The good news is, that with sound financial advice, there are ways of at least being well prepared for the summer holidays – and that doesn’t mean packing the right SPF sunscreen.

At DBA, we offer business accounting services that place as much emphasis on preparation and looking ahead, as on looking back at what you’ve earned. Here are our thoughts on summer holiday financial survival.

Managing Cash Flow Issues

You might find that even if you think you’ve got essential roles covered in your business during the summer holiday period, your clients may not have.

If key personnel such as managing directors and financial or clerical staff are away then this can mean a delay in processing payments, leading to cash flow issues for many SMEs.

Late payment is an ongoing issue for many small and medium sized businesses, with the amount owed to 52% of UK SMEs totalling £44.6 billion, according to recent research from the Zurich insurance group.

The same research shows that 64% of SMEs frequently encounter delays of over a month in payments that are already 30 days overdue. 21% of firms said they were owed over £25,000, while one in ten were overdue payments of over £100,000.

Image representing summer holiday season for SME for an article explore how small and medium businesses can manage their finances, cash flow, and productivity when staff, clients and suppliers are on summer break. The summer can make late payments and consequent cash flow issues worse, leading many businesses to take out expensive bank overdrafts, or worse, use the company credit card, to cover themselves.

This is where the importance of planning ahead is so crucial. You might not be able to prevent late payments from occurring during the summer holiday period, but you can at least be better prepared for them.

Managing Reduced Productivity over Summer?

Hand in hand with late payment blues can come reduced productivity, just at a time when a business would benefit from improved sales revenue. This slow down often arises from more employees being away on leave.

Clearly there is a people issue here, where managing staff requests for leave must be balanced against meeting business demands.

There are, for example, situations where an SME, if it’s storefront or other retail-based business, will be facing increased demand in the summer sale period. If this is the case, then it’s vital that there are enough people in place during the summer to cope.

Summer can be enough of a distraction to employees in work to cause productivity to dip, sapping both energy levels and morale. The best way to combat the summer slump is to recognise it’s there and to proactively deal with it.

This doesn’t have to be a discipline-based issue. Rather, it might be a case of thinking tactically, by giving people Friday afternoons off, for example, or organising a workplace barbecue to recognise their efforts. These are means of shoring up loyalty and getting more out of people by accepting that they need a Image representing summer holiday season for SME for an article explore how small and medium businesses can manage their finances, cash flow, and productivity when staff, clients and suppliers are on summer break. boost.

Increasing Efficiency in an SME

There may be limited things you can do about late payments during summer holidays, but you can look at other areas of your business, to help tighten up your expenditure and allow you to make savings in other areas.

This then offers a better cushion against the impact of reduced revenue.

Are you up to speed with your business expenses? Look at your processes, because if they’re still coming through cumbersome, manual spreadsheets, you’re letting them take up too much of your time and resources, with a higher margin for error.

Cloud-based and automated accounting services make processing expenses much easier and help tighten up on missing any details.

Make sure your business isn’t failing to claim for all that it’s eligible for in trading expenses. These can include business travel expenses, some equipment and communications, alongside accountancy fees.

If you’re a commercial property-owning business you can claim certain capital allowances, on items such as plant and machinery, heating and air conditioning, security, communications and IT. Building refurbishments may also qualify.

Is This Your Summer of Sound Financial Planning?

The summer rolls around with a certain degree of predictability, so it’s crucial to plan for it, using sound financial advice from accounting professionals. Mark the summer period in your business calendar and start to prepare for it well in advance.

Image representing summer holiday season for SME for an article explore how small and medium businesses can manage their finances, cash flow, and productivity when staff, clients and suppliers are on summer break. Your local business accounting services in Lancashire will help you to be ready for the summer by looking at your sales targets, what you’re spending, and what you can expect to get back.

There are less obvious allowances you might be able to claim, such as Research & Development (R & D) tax relief on investing in new products and services through technology. You might also look at what you can get back from the Apprenticeship Levy, providing you’re eligible.

Despite the British weather, the summer isn’t all gloom, because the very fact that it’s seasonal means that it’s also, to an extent, manageable. You just need to seek the right advice about your business planning.

You don’t have to let the summer catch you out. We’re here to help

Get in Touch

If you need business accounting services in Burnley, Bury, Rossendale, wider Lancashire or anywhere else across the North West, please get in touch. We’re easy to talk to. Give us a call on 01282 902456, email info@directbusacc.co.uk or visit the contact page on our website and fill in the contact form – we’ll reply as soon as we can.

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