When was the last time you went on holiday, and left work at the office? This becomes even more important over the December holidays when traditionally it is a time to reconnect with family and friends.

No one wants to be called by their accountant, or customers and suppliers, or even worse, SARS, whilst lying on the beach in Cape Town, or watching a lion in Kruger, or hiking up a mountain in the Drakensberg – everyone has their own idea of a good holiday! – asking for information, payment or explanation of a lack of delivery of goods or services.

Planning for the December holiday period, by default, is very important to manage expectations and keep staff, customers and suppliers happy.

There are a few things that need to be considered when making those plans.

Over the next few weeks, we’ll be taking a look at the importance of planning for the December holiday period, as well as specific topics for planning around the December holidays.

Let’s have a look at some important topics below…

Confirming customer and supplier closing and opening dates

There is a good chance that most of your customers and suppliers will close down over the Christmas period.

Their closing and opening dates could have an impact on your business’s closing and opening dates, and will definitely have an impact on your deliverable dates… No business owner wants to let customers down when it comes to delivering goods or services on time!

In South Africa, most companies close from the day before the Day of Reconciliation public holiday, and open 15 working days thereafter in January.

However, due to the supply chain chaos worldwide, as well as the riots and NUMSA strikes that have impacted the South African economy specifically, it appears that some companies are planning on closing later and opening earlier.

Have you received closing and opening dates notifications from your customers and suppliers yet?

If not, it may be an idea to contact them!

Informing customers and suppliers of your closing and opening dates

Once you know when your customers and suppliers are planning to close and open, you can plan for your closing and opening dates as well.

This will give your customers time to plan ahead and ensure that they have stocked up as required, and to assist you in completing agreed upon services to them.

Team planning

Some companies require that their staff take all their leave over the December holidays, and some companies, depending on their closing and opening dates, allow for more flexibility.

Have you discussed leave with your staff over December and January? You may need some feet on the ground right up until the last minute, sometimes for a day or two later after your closing date to “tie a few ends up.”

As a business owner, you will also need to consider leave balances and if staff have sufficient leave to take over the required process. If staff do not have sufficient leave, but the company as a whole closes down, the staff member will, depending on the company’s leave policy, go into negative leave, or may be required to take unpaid leave.

It is important to discuss these dates with your staff and their leave options before December so that there are no surprises and upsets in processes.

Cashflow management

Let’s face it, December is a short month. This means hoping that you get paid earlier, so that you can also pay everyone earlier.

Sometimes however, things don’t go as planned and all it takes is for one customer to pay as per normal (i.e. at the end of December) which could place limits on the availability of cash flow that you have.

You will need to build up some sort of a reserve during the year to cover paying expenses early, before you have received money from your customers.

The following cashflow items can be seen as the most important:

Ensure staff are paid

Paying staff normal salaries and wages is a priority. And then there are staff Christmas bonuses that also need to be considered.

As Richard Branson said:

“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients”.

It has become sort of a tradition, if not expectation, that staff are paid early in December – Even if that is the last day that company is open, it will still be before a normal salary pay date.

Does your company have sufficient cash available to cover your staff salaries at an earlier date?

Wages are also generally paid upfront for the entire period, which adds extra strain on the company.

It is very important that plans are put in place to ensure that salaries and wages can be paid, and the resulting payroll taxes as well (which we will deal with in our next blog).

Ensure suppliers are paid

If you can’t get materials to make your products, or if you don’t have access to subscriptions to supply your services, then your company will not exist for very long.

It is therefore important to keep your suppliers happy, and your account payments up to date.

If you are in charge of managing payments, and will be on holiday, as well as another other person involved i.e. the releaser, we suggest that you settle accounts before closing for the holidays.

As mentioned above, there’s nothing quite like a phonecall from a supplier about late payment when you are on holiday (well there is one worse phonecall which we will deal with later!)

Take the time to plan ahead and inform suppliers about when payments will be made, so that you can have a peaceful break, void of late supplier phonecalls!

Ensure customer debt collection takes place

If you have customers who pay you on 30 day accounts, and who you know have indicated that they won’t be open at month end, reach out to them and see if they would be willing to settle their account before they close. You never know, some may just agree to it (so as to avoid your late payment phonecall!)

If the customer doesn’t agree to paying you early, remind the customer that they are on a 30 day account and that you expect them to settle the account balance on or before the 31st of December (weekend depending), and that should they fail to pay on time, debt collection phonecalls will be implemented and possible interest may be charged on the late payment.

Ensure SARS liabilities are paid

Even though this is our last topic, it does not make it the least important! After staff, late payments to staff probably could have the biggest impact on your business.

Any late submission of a return, and payment thereof, will result in immediate penalties and interest. Not every supplier will charge you interest on your (slightly) late payment, but SARS will. If a choice has to be made as to who to pay, SARS needs to be on the list just below your staff.

However, if the correct planning ahead in terms of cashflow, and managing customer receipts (remember that if you are VAT registered, 15% of the money that comes in is not your money to begin with), VAT payments should be handled.

We always advise submitting and paying VAT (November submissions) and PAYE (December payroll taxes) before closing for the holiday – It really is not a nice feeling to wake up on the 1st of January and suddenly remember that you forget to release your VAT the day before…

In addition, your accountants may also go on holiday over this period, and may not be available to assist you if you have a problem relating to a SARS submission. (TAC has staff members on standby, however we don’t want paying at the last minute to become a habit for any customer).

If the above topics are attended to early, businesses should be able to manage tight cashflows around December and January every year.

Ensure that customer orders are completed

If you have planned correctly, and communicated effectively, you should not have a problem completing customer orders as per your original timelines. This obviously doesn’t take any emergencies into account, but again, solid communication with your customers is a must.

When receiving orders in October and November, it may be an idea to add an extra couple of days onto the expected delivery or completion date to allow for any situations that fall out of your control.

In addition, never over commit, whether it at the beginning, middle or end of the calendar year. Know your processes and how long they take in order to keep the quality that you strive for and present to your customers.

It is also not fair to expect staff to suddenly work overtime in December after what is always a long year (and every year just seems to keep getting longer and longer). That being said, every now and then an important job does “land in your lap” as a last minute urgent job which could lead to potential new business. If your original planning has allowed for a day or two later on existing jobs, you may have the time and resources to take hold of this opportunity.

Ensure that you have sufficient stock to start your planned January orders

There is nothing more frustrating than coming back from a lovely holiday break and being ready to hit the ground running, and not being able to due to a lack of stock.

If you planned correctly, the stock needed for January jobs would have been delivered in December before you closed, or could be delivered as soon as you open (depending on whether your supplier has opened or not).

This does mean that there is a payment required to the supplier before you potentially receive payment from the customer, so it may be a good idea to get some sort of a deposit upfront so that you can pay the suppliers.

This will also avoid your staff sitting around idle whilst waiting for staff to arrive.

 And when all of the above has been attended to…

Businesses often neglect the importance of planning for the December holidays which leads to unnecessary stress and staff and customer dissatisfaction.

If you take the above comments into account, your path to a restful holiday should however be made easier to achieve!

As accountants, we guide our clients through their year end and assist them with meeting their payroll, SARS and supplier liabilities, as well as debt collection targets to avoid cashflow problems.