6 Strategies to Maintain Cash Flow During the Holiday Season

The final few months of the year are upon us, bringing with them beloved holidays, time with family, and some of the most dramatic changes in profit and expenses in the year.

Some businesses experience a spike in sales over the holidays, while others, like seasonally-based businesses such as gardening equipment suppliers, may need to tighten their belts for the winter. All businesses need to prepare for this season to manage additional expenses, fluctuating profits, or increased product demand.  Regardless of your industry, the key to thriving during the holiday or winter season is maintaining strong cash flow.

Six Ways to Maintain Cash Flow 
Here are six strategies to maintain cash flow and help your business thrive whether you are in a busy season or not.

1. Incentivize pre-sales and early payments
Incentivizing customers to buy sooner rather than later is one way to bring cash in ahead of time, enabling you to cover costs if you need additional inventory or staffing, or to cover expenses during your slow season.  

2. Stay on top of inventory management
Over- or under-stocking can lead to wasted time and money. By analyzing past sales data, business owners can better forecast demand, allowing for smarter and more precise ordering. This not only ensures that inventory aligns with customer needs but also supports effective cash flow management.​

3. Offer promotions and holiday deals
Preparing promotions for the holiday season can retain loyal customers and attract new ones, increasing your sales volume and improving your cash flow. This also creates a faster turnover of inventory which is also good for cash flow. 

4. Manage expenses and delay non-essentials
Reviewing expenses in advance and identifying non-essential items that can be postponed is a great way to maintain cash flow. This ensures you have more funds available to handle a sales spike or navigate a slow season.

5. Build a cash reserve
A cash reserve provides a reliable safety net for unexpected expenses. By steadily growing your reserve throughout the year, you can strategically use it to cover costs and expenses during periods of low cash flow. 

6. Consider short-term financing options
For business owners who may not have cash on hand or in reserves, short-term financing is a great option. Options such as a line of credit, a business credit card, or, for some businesses, purchase order financing or invoice factoring may be an option.

Purchase order financing is short-term financing that can help your business pay for the inventory needed to fulfill incoming customer orders. Invoice factoring is when a business sells its accounts receivable to an invoice factoring company. The factoring firm advances cash to your business and then collects on the outstanding invoices. The balance is paid to the factoring firm minus a service fee. Both are excellent options for business owners who need more immediate cash flow or are facing a spike in sales.

When looking for a purchase order or invoice factoring company, be sure you find a company that:

● Is attentive to detail. 
● Has a high rate of success among customers.
● Is efficient.

This is never more important than during the rush of holiday sales when speed, efficiency, and customer satisfaction help maintain cash flow.

The holiday/winter season can be a win for your business if you prepare well ahead of time and maintain your cash flow. Employing these strategies will help small- mid-sized businesses navigate the end of the year with confidence and begin the new year from a place of prosperity.

Looking to maintain cash flow for your small business during the holiday season? We can help. Prairie Business Credit is a national working capital provider to young, growing, or recovering businesses. We offer accounts receivable financing, purchase order financing, and equipment financing. Our company serves both as a trusted financial resource and consultant to entrepreneurs dedicated to building their businesses and ensuring their success.