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Tips for your business finances to close the year well

According to an analysis by the fintech Drip Capital México, the current season of the year represents a challenge for companies, due to the fact that several factors come together such as the Good End offers, the holidays, the end of the year, together with the economic crisis derived from the pandemic. Therefore, they will need to take financial measures and also have the working capital that is required to carry out their activities, as well as fulfill their obligations in the short term.

Edmundo Montaño, general director of Drip Capital Mexico, pointed out that this year has been very complex in terms of the economy. Which represents an obstacle to meeting obligations, for example payroll and the payment of Christmas bonuses or end-of-year bonuses. He also emphasized that increases in sales are necessary but they are also a challenge because they involve more operating and production expenses.

Don’t make decisions that compromise your finances. Photo: Pixabay

In this sense, he pointed out that companies will require working capital, therefore access to financing will play a key role in the remainder of the year. In this way, share some financial tips that you can implement to face the end of the year and in times of crisis.

Identify your needs

During the high seasons and with the bonus payments, as well as the Christmas bonus and other obligations that correspond to the end of the year, the costs tend to rise. For this reason, it is better to analyze your needs regarding production and raw materials, as well as inventory, labor or sales commissions.

From these elements you will be able to identify the working capital that you will occupy in this stage.

Having a lot of sales does not mean that it is more money

That sales increase is not significant in terms of money, it does not mean that you will have it immediately because some are in installments and are made in times of discounts.

For this reason, you should not make decisions that compromise your economy, it is advisable to analyze your cash conversion cycle and plan around it.

Reflect on the experience

2020 has been a very different year in several aspects, having a crisis that was not foreseen. But still in the short term there are essential elements that you can apply to your business.

You should start by reflecting on other times of the year, like your performance in past seasons to foresee unforeseen events or needs, it is also advisable to define a financial plan so that by 2021 you have how to cover the essentials.

Maintain a network with your suppliers or partners

All the effects of Covid-19 have reflected the importance of production chains for the economy itself and for business as well. In case you were not directly affected, your partners or suppliers, perhaps due to external factors, could have applied a fee for your business.

It is essential to look for options so as not to run out of inventories, also raw materials or the services you require during this season.

Request financing

When sales increase it means that you use more resources to maintain this growth. If you currently have heavy expenses, you can look for financing.

In order not to go into debt with different credits, consider that there are a variety of alternatives to finance accounts receivable, for example factoring. In this way, you can offer different types of credit to your buyers and you will also receive the money in advance.

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