Even the most adept planners can often run into trouble when it comes to footing the bill for a period of increased demand. The delay between paying your suppliers or team and getting paid yourself can put unwanted pressure on your cash flow. But don’t worry, it’s far from a unique challenge and there are plenty of tools to help you make a success out of seasonal demand. Here’s what you can do to afford a headstart on the festivities this year.

'Tis (nearly) the season

For UK SMEs, more than a quarter of revenue comes from seasonal demand. With Christmas and other winter festivals driving customer spending, having the right resources and people in place is key. There’s a lot of potential revenue at stake in a short period of time.

But the gap between spending yourself and being paid by your customers can feel impossible to bridge. And with the festive season just a few months away, August is a pivotal month for preparations.

What are the key worries small business owners have to contend with when it comes to ramping demand? These are the main costs they’re contending with:

1. Paying suppliers
2. Hiring enough people to help fulfil orders or project work
3. Organising the right warehouse space to store increased stock
4. Making sure they can deliver their goods or services on time
5. Waiting for payments from their customers

Beat the crowds

If you’re not already thinking about the festive season, then here’s your nudge. Spend time now with your teams deciding on timelines for your upcoming projects or necessary stock orders. Getting a clear idea of what needs to be done and when will help you plan out the people, lead times and cash needed to achieve your targets.

Be upfront with your suppliers too. The more notice you can give them about the orders you’ll be placing, the better prepared they can be to service these on time. So keep them in the loop with your plans and hopefully you’ll avoid any hiccups down the line.

Try to dedicate time to evaluating the channels you’ll be relying on for a spike in demand. A lot has changed during the pandemic, especially for businesses in manufacturing and retail. The percentage of people shopping online has gone up by 30% in the UK since the start of the pandemic. Is your tech up to scratch to handle an influx of orders? And if you do see a big jump, do you have reliable warehousing and delivery companies to manage those orders?

Seasonal delights

Around three quarters of SMEs sell their goods and services to blue-chip companies and large corporations. Lots of these businesses can string their suppliers out for 80 or even 120 days. In fact, 87% of SMEs can’t take on the extra orders they’d like to as a result. If you want to make the most of increased demand, your own production or hiring will have to match, and that requires cash.

There are a few things you can do to boost your cash flow in preparation for seasonal demand. First, you could look into invoice finance. This simple tool allows you to advance the funds already owed to you in your outstanding invoices. As soon as you’ve completed work and issued an invoice, you can access up to 90% of what your customer owes you without having to wait out lengthy payment terms.

With a flex loan, you can get an instant cash injection of up to £100,000 all at once or in smaller amounts as needed. You can withdraw and repay on the flexible term of your choice and your available balance reloads with every repayment.

If you’re focusing on long-term business improvements like investing in new warehouse space, then a business loan might be a better fit. The Recovery Loan Scheme is government-backed and aimed at viable UK businesses looking to drive their business forward.

The simple way to work out what kind of facility will help your business is to understand the cash demands you have. Use our simple tool to find the right finance for you based on your cash challenges and the ambitions you have for your business.

Deck the halls

Ultimately, cash flow can be your biggest hurdle if you’re not prepared for seasonal demand. Getting the right tools in place to match your plans now will save you time and stress further down the line. Get ahead of the game and prep your workshop for the upcoming sleigh rides.