Planning for Christmas

Christmas is an annual festive event and for many people it presents the ‘same old, same old’ as the same thing happens every year it comes around. Many tourists opt to spend it in the Caribbean in order to enjoy a completely different Christmas Day in a different environment and celebrate with a different culture and cuisine.

Christmas is one of the busiest tourist periods for the region, contributing a huge amount the very large tourism income. Many businesses across the Caribbean must have plans in place to cope with the surge in demands at this time of year. This is particularly crucial to hotels, tourist attractions and airports to name a few. Finance professionals must be aware of the issues around seasonality in their organisations.

Toy manufactures are especially busy during this time of year and must implement effective supply chain management in order to capitalise on the surge in demand.

According to the NPD group, the week of Christmas represented up to eight percent of all toy sales in the US alone, and is the second most important week of the year for the toy industry—the week before Christmas is the most important which accounted for 8.5 percent of sales for the year, showcasing the need for supplies to meet the very high demand across that period. Multinational toy organisations such as Mattel, which operates across diversified cultures and economies in the world, must ensure that they have the right stock during the key selling seasons.

Seasonality also has an effect on the labour. In the retail industry, businesses must hire greater numbers of workers during the Christmas season to handle the increase in holiday sales. There’s considerable stress on managers who will have to ensure adequate staffing levels are achieved for the period and ensuring that their wages can be paid.

Working capital is also affected by seasonality. During the Christmas period where there is peak productivity, the amount of working capital that a company maintains will generally be higher to cover increased operating expenses. But depending upon the nature of the industry, some of that working capital may have to be put in reserve when business and cash flow slow down.

The Christmas period is also a key selling time for making online purchases. Organisations must ensure that their online processes can support the surge in demand. Online shopping is a growing consumer trend and a failure to process the orders can affect the business financially. But even beyond the financial impact, the threat represents reputational damage to a brand which could be even more disastrous. If businesses were to experience any disruption over the next few days, they could lose customers to their competitors forever.

No sensible finance professional would leave planning for the New Year till the end of the previous year. During this time of peak business activity, the amount of time that a business owner or manager has to plan for future operations limited until they reach they’re slower periods.

Finance professionals can prepare for this need to plan earlier through enhancing their skills and competency in vision. Vision is the ability to anticipate future trends accurately by extrapolating existing trends and facts, and filling the gaps by thinking innovatively. Vision can then be turned into strategies that can be used to guide corporate objectives and operational goal setting, determine the actions needed to achieve these, and select the metrics and other indicators against which performance can be measured.

Christmas is huge example of seasonality that has a great impact on business. But it’s not the only thing that affects organisations. Climate fluctuations, government decisions and even financial reporting deadlines can affect how businesses operate at certain times of the year. What is constant though is the need for effective finance professionals. Accountants are crucial to steering businesses through these difficulties; after all accounting is the backbone of the business financial world. Through contributing to discussions about economic growth, managing finances and promoting good financial management, they enable CFOs to successfully navigate businesses as they face tough times ahead and take advantage of challenging circumstances.