The festive season can be a challenging period for SMEs particularly when it comes to managing cash flow and working capital. The combination of higher sales activity, purchasing stock to rebuild inventory and late customer payments can be devastating if not well managed. Importers face additional pressure because even more working capital can be locked up in stock either in transit or awaiting customs clearance. It’s a perfect cash flow storm.
In this critical period it is important that importer/wholesalers remain on top of cash flow and maintain their purchasing power. In fact, how well the business navigates this period can make or break a year, so Scottish Pacific Tradeline has prepared a few quick tips to help clients navigate these challenges:
Refocus on cash flow management
The festive season is a time for extra vigilance when it comes to accounts receivable management. Ensure collections and credit management processes are adhered to, invoice details and terms of trade are clear, late paying customers are followed up and new invoices are issued as promptly as possible. A refreshed cash flow forecast should be high on the priority list.
Maintain your buying power
Cash can be in short supply at this time, but it is important that the business preserves its buying power and remains able to take advantage of opportunities such as supplier discounts or favourable exchange rates.
To boost buying power a Tradeline facility will pay the client’s supplier directly in a matter of days, then provide the client with flexible payment terms of up to 90 days to help it through the months of leaner cash flow.
As additional protection, an invoice finance facility can advance cash against invoices for completed sales, which can help smooth out cash flows and allow cash to be recycled just as quickly as in other months of the year.
Invest your time wisely
Whilst trading might slow after the festive season, ‘business’ never stops. Draw up a calendar and pencil in a few of your higher priority planning items such as:
- Strategic plan – Revisit and if necessary redefine your longer terms goals, objectives, and strategic roadmap
- Product and market review – Stop to take a step back and look at the marketplace
- Tactical marketing plan – Draw a line through initiatives which did not work and/or consumed a lot of your time through the year
- Resourcing plans – Reflect on your resource and skills requirements for the coming months. Getting this right will provide a solid foundation for good results
- Self-improvement – Inspire yourself by reading business literature or skilling up in areas you believe are important. Getting an understanding of new business technologies and their applications can get you seeing new opportunities.
Reflect and recharge
Of course it goes almost without saying that you should take some time out to reflect, and recharge. Reflect on the positives, negatives and learnings from the calendar year. What will you do differently? Getting away from the business and putting some distance between you and your business’ problems can also be a great way to solve them. Finally, remember too that you are critical to the success of your venture, so be sure to spend some time unwinding and recharging as you will need every ounce of energy to do it all again in the new year.