Pre-holiday cash flow shortage: secure client funding ahead of time by Capitalise

Pre-holiday cash flow shortage: secure client funding ahead of time by Capitalise

For most sectors, financial results over December and January show some seasonality, which inevitably affects a business’ cash flow. But this impacts sooner than you may think.

Busy, busy, busy

In businesses which trade with consumers such as hospitality, restaurants, hotels and retailers, November and December can be their busiest months. Clients will be gearing up now to bring in more stock, more staff and more marketing expenditure to service the population’s demands as they prepare for the holidays.  

These expenses may be due for payment before the profits of the consumer spending have arrived in the company’s bank account, therefore a cash flow gap will occur.

Shut it all down

Conversely, manufacturing and engineering companies traditionally have a two week shutdown over the Christmas period, so this could be their quietest time of year. Other sectors such as construction can see lower profits in January due to poor weather.

Lower activity levels cause lower profits but the inevitable monthly costs can mean that demands on cash are greater than ever during this period.

The taxman comes calling

Many business owners have substantial personal and corporate taxes to pay in December and January. With HMRC increasing their compliance and enforcement teams, there is a definite hardening of the stance taken in respect of overdue taxes. Companies who delay paying taxes to HMRC, in order to finance other outgoings, will find that action may now be taken more swiftly.

If you have clients who are using HMRC as an informal lending facility, alternative sources of finance may be an important consideration, sooner, rather than later.

The best products to fill short-term lending gaps

• Matching outgoings with seasonal income using a Merchant Cash Advance for those who use card payment terminals with customers

• Businesses who invoice companies could use an Invoice Finance or spot finance facility

• A short-term gap may be best served with a revolving credit facility such as an overdraft. However, if the need is longer term, then a loan or asset refinance could be more cost-effective and provide greater headroom

Get ahead, submit a short application today to secure funding in time for your clients.

With over 100 lenders, plus dedicated funding specialists on hand to support you and your clients, you can also book a call to find the best facility for their needs and avoid any last minute rush for cash.