For many businesses, Christmas and New Year are both the most wonderful and most challenging times of the year. Whether it’s a retailer ramping up stock orders, a manufacturer managing late supplier payments, or a hospitality business facing staff and supplier surges, the festive season often amplifies these peaks and troughs.
At this time of year, the importance of seasonal business finance becomes starkly visible. Sales peak bringing in new revenue but often also bringing in higher costs for the business, while January can expose a dip that puts real pressure on working capital. For lenders, it’s precisely in these moments that our flexibility is tested most, and where we must aim to provide additional value to clients beyond the stability of their existing facility terms and payments.
In December, cash often moves faster than at any other time of year. Stock orders go up, payrolls increase and so do customer demands. Customers expect full shelves, quick turnaround times and uninterrupted service. For many SMEs, the issue isn’t sales and profitability, it’s liquidity.
The timing mismatch between money coming into the business and it needing to go out again can make or break a business’ ability to thrive during the festive season. Not only this but cashflow reserves are more important than ever at this time of year; unforeseen events or expected surges in business may call for new opportunities to be seized unexpectedly, and only with a steady cashflow can businesses truly jump on these opportunities. That’s why lenders need to assess their offering in line with seasonal demand to avoid a ‘one size fits all’ approach to clients’ facilities.
Our role as business finance providers is to respond to a business’ needs. We are constantly reviewing and changing how we deliver our finance solutions in order to make ourselves easier to do business with. A big part of this is providing flexibility for our clients when they need it most. We know capital agility can define a business’ success at this time of year, which is why tailored solutions can be offered during these busy peaks to help access the additional funding needed on top of existing finance facilities. For example, simply considering a cashflow loan alongside an existing Invoice Finance facility is a common practice at this time of year.
These solutions not only help to boost cashflow reserves for our clients by providing short-term overpayments, but also give confidence and peace of mind that whatever the festive season brings for their business, their overheads are secure and the January lull is accounted for. As we head into the festive season, I’d encourage businesses to communicate with their lenders early about their seasonal needs. Seasonality is part and parcel of the business calendar, but it shouldn’t be a barrier to growth.
