Increase Your Cash-Flow During
This Holiday Season!
Almost 40% of Holiday shopping begins before October 31st. Think about that single fact for a moment. Over one-third of the consumers who increase their buying activities, as associated with the Holiday shopping season, initiate those spending efforts before Halloween! Therefore, you may find that the process (cycle) of selling your products and then restocking your inventory to ensure you have enough goods for more sales has already begun for many small and medium sized businesses. What does that mean to your company? It means your biggest challenge may be managing your cash-flow this season.
In all small and medium sized businesses, there is typically a lag between expenses and income throughout your typical year. This becomes even truer for seasonal retail and ecommerce businesses. When you consider that your holiday inventory may arrive in August or September but the majority of your customers won’t impact your business until November, December or even January, it is essential you take advantage of your sales developed in October.
What is Your Seasonal Cash-Flow Plan?
Rhonda Abrams, a business and financial specialist for USA Today, has laid out what many business consultants believe is an excellent cash-flow plan for small and medium sized businesses to emulate during the holiday (sales) season. Below are the main points of her seasonal business plan.
Get Money Coming In Sooner!
- You should be encouraging pre-sales starting today. Offer discounts for pre-paid purchases early in the season. As an example, if you sold $100.00 worth of products (non-refundable) for $80.00 when paid before November 15th, you may have lower profit margins, but your cash flow increase would be immediate.
- Hold early season sales. If you customers make purchases from you early in the season to take advantage of these sales, you will turn over merchandise sooner in the season and improve your cash flow.
- Offer digital gift cards. Gift cards are in essence, pre-sales. By selling digital gift cards or certificates that can be given as gifts from your buyer to family and friends, you will increase your cash flow and realize those funds in your bank account today….long before the end-use customer actually purchases your products.
Get Paid Faster!
- Offer multiple billing options. In this competitive age of retail sales, now is not the time to be too picky about how you are willing to be paid money. Perhaps you should consider biting the bullet and begin accepting less appealing forms of payments. Consider adding Discover and American Express even though they generally charge more in transaction/processing fees. With some of the new and innovative ways available to exchange Bitcoins for government backed currencies……this is another option as well.
- Take mobile payments. Mobile credit card readers from Square, Intuit, PayPal and others enable you to accept credit cards even if you are on the go. Having the ability to monitor and manage your business while on the go is even more important during the holiday season. Being able to manually input a customer’s credit card or being able to help solve a technical issue for a buyer can be the difference between securing that sale and losing it.
Manage YOUR expenses and vendor payments!
- Negotiate more favorable payment terms. Ask your vendors to extend the amount of time to pay your bills to at least 60 or 90 days, instead of the typical 30 days…..ideally without incurring additional interest charges. It never hurts to ask for such “special treatment,” especially if you have already been dealing with them for a few years now.
- Request Installment payments. For larger invoices, ask vendors if you can pay in installments over three to six months instead of one lump sum. This also may not be standard practice, but a vendor might be open to installment payments rather than longer payment terms. Again……it never hurts to ask.
- Pay by credit card. If you make payments with a credit card you’ll likely pay some interest, but this will give you more flexibility during a critical time of the sales season. Not only should you ask vendors to accept credit card payments but you should seek out vendors who do. If used correctly, a credit card can be used much like a seasonal small business loan.
- Arrange for vendors to fulfill your customer orders. You can continue to do the marketing and customer service, but the manufacturer or vendor fulfills the orders once placed. This will cut down dramatically on the amount of inventory you must purchase and warehouse. No doubt you will have smaller profit margins on those sales doing business this way, but you will tie up less money and reduce much of your business risk. However, keep in mind that your online customer service ratings and reviews will be based on how your products are received by your Therefore, it is imperative that you only choose vendors who will reflect excellent fulfillment capabilities!
There are basically two ways to take advantage of this holiday season with regards to your cash flow. One is the same old way you have always handled your seasonal cash flow in years past. The second way is to think out of the box and try some new concepts that you may not have not previously considered.
As business guru and ecommerce expert Shiko Ohana of MosaicaFX has suggested, “…if sales are the nourishment of your business…..then cash-flow is its life blood!” With that thought in mind, don’t overlook the obvious (and not so obvious) sources of seasonal cash-flow transfusions.