It’s no secret that businesses can experience a lull during seasonal times, such as the summer months and the extended holiday season. This can be attributed to a decrease in production and sales, as customers take time off to enjoy themselves. However, it can often lead to a negative cash flow, which can be dangerous for any business.
If your business is starting to experience a slowdown right now, don’t worry – you’re not alone. In this blog post, we’re going to talk about how you can maintain a healthy cash flow and also discuss some external options available to you if you need extra help.
How to maintain a positive cash flow
There are a few key things you can do to ensure your business has a healthy cash flow. Firstly, it is important to keep on top of your invoicing and make sure you are chasing any outstanding payments and issuing statements. This can be done by setting up reminders or automating your invoicing process. This will help you to get paid on time and avoid any potential delays.
Secondly, it is a good idea to keep track of your spending and only order the stock that you need, rather than overordering and tying up valuable cash flow. You can do this by forecasting your sales and knowing your customer buying patterns.
Thirdly, maintaining a good relationship with your suppliers can help you to negotiate better payment terms, achieve potential discounts and avoid any cash flow issues further down the line.
Another important aspect to maintain a positive cash flow during seasonal business times is to plan ahead. This means creating a budget and sticking to it. When you know what your expenses are going to be, you can make adjustments accordingly. For example, if you know that production will slow down during the summer months, you can cut back on some of your expenses. This will help you to avoid going into debt during these difficult times.
Already experiencing cash flow problems?
If you are experiencing cash flow difficulties, there are a number of external options that can help. One option is invoice finance, which is a type of funding that releases the cash tied up in your outstanding invoices. This can be a viable option if you are waiting on payments from customers and need to free up some working capital.
What is invoice finance?
Invoice finance is an advance given against the value of unpaid invoices. It’s a way for businesses to borrow money against unpaid invoices due from customers that can be used to cover expenses until invoices are paid.
How does it work?
The way it works is simple; you sell your outstanding invoices to a lender at a discounted rate, and they advance to you, up to 90% of the value of the invoice. Once your customer pays the invoice, you will receive the remaining balance minus any fees charged by the lender.
What are the benefits?
There are many benefits of using invoice finance including:
- You can free up cash that is tied up in unpaid invoices.
- It can help you to manage your cash flow more effectively.
- It can give you access to extra funding when you need it most.
- It can help you to grow your business.
Maintaining a healthy cash flow is essential for all businesses, but it can be especially difficult during seasonal times. If you want to find out more about invoice finance and how it could benefit your business, get in touch with one of our experts today. We are more than happy to chat with you about your options and answer any questions that you may have.