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How to manage the impact of seasonality on cashflow

Within this piece, we have highlighted what business owners can do to alleviate pressure on their business cashflow during summer months. Seasonality in the summer is often forgotten with other festive holiday times taking precedence but late summer particularly can be a quiet time for many businesses. Here is how to make sure you do not get burned by the summer sun.

What Makes Summer Stressful?

The main reasons for the growing demand on cash flow during the summer are the following;

1.     It’s Holiday Season - Summer can be a stressful period for businesses as chances are, your employees will be taking holiday. Without forward planning, this could affect productivity and business performance due to a lack of staff.
 
2.     Late Payments – The whole supply chain can be impacted by holidays…invoices can take longer than usual to be settled and sometimes handovers mean continuity (and payment) gets lost.
 
3.     Seasonality - Many industries especially those in businesses operating in seasonal markets encounter a slow down during this period which can impact on the working capital of a business, this can lead to cash flow issues in later months.

“At Nucleus we plan months ahead for a quieter August – our marketing budget is lower, we don’t launch new acquisition campaigns and we predict lower targets because we know that a lot of business owners are away. We do a lot of preparation ready to ramp everything up in Autumn.” - Gonçalo Cascais, Marketing Manager

How to Manage Cash Flow during summer?

Cash flow problems during summer can be avoided by setting up preventative measures and some forward planning. Here are some of our ideas on how you can manage cash flow during summer:
·      Take out Invoice Finance Pre-Emptively - Invoice Finance allows you to deal a delicate cash flow, avoiding a potential financial crisis incurred due to the customers not paying on time. By having a partnership in place beforehand, you have a contingency, giving you peace of mind.
·      Improve Business Forecasting- By spending more time planning, you can plan ahead for a potential lull in normal trading activity. It may also be wise to postpone any non-essential expenditure during periods where there is a likelihood of cash flow being under pressure.
·      Provide Seasonal Incentives- During known quiet periods, you could offer seasonal incentives to encourage debtors to make immediate payments, for example, offering discounts on future purchases or offering personalised gifts.

By planning ahead and choosing a trustworthy partner, you can alleviate any pressure you might face in the summer period with regards to your business cash flow. This will not only sustain you through the months of financial instability but allow you to be in a better position to reap the benefits in the following months.

Our products and services come with guaranteed expertise, honesty and certainty. If you’d like to find out more, please contact one of our credit specialists on 0207 839 1980 or email contact@nucleus-cf.co.uk.
 

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