The colder, darker weather appears, for many it is a time to hibernate but for small businesses, the run-up to Q4 is anything but sleepy. With Black Friday come and gone and around the corner Christmas with local trader Christmas markets and then follow into the New Year Sales is fast approaching too, now is the time where small businesses have a fantastic opportunity to increase their sales and profits, together with growing the business.
However, Q4 is not always an easy time for small businesses and a busy period can create serious cash flow struggles and solutions are required.
Sales are up – So why do small businesses struggle?
Yes, in general, sales increase during the last quarter of the year thanks to increased shopping and sale periods such as Black Friday, Cyber Monday and the Christmas/Festive and New Year sales.
However, small businesses who sell directly to customers often cannot compete with the big retailers when it comes to slashing the cost of must-have sale items. Large retail chains can and do make a considerable profit from sales because they are able to offer fantastic deals. Something that may not be always feasible for small businesses to provide.
Another issue for small businesses is when they supply the larger companies. Big retailers typically demand much more stock for Q4, yet even with bigger orders, the lengthy payment terms still prevail. This means small businesses often have to recruit more team members, create more stock and ensure it reaches their clients without seeing a penny of the order money until the next year. With payment terms of 60,90,120 days are often common place in the SME world.
Small businesses, building up this level of cash flow in order to recruit and pay staff on time as well as building up an inventory of stock is unfeasible at this challenging period of the year. In fact, purchasing more stock was a top expense in Q4 for 41% of small businesses while small businesses also increase their advertising spend by 25% at this time of the year.
With costs quickly mounting, for small businesses to thrive and survive this time of year, SME supply chain and invoice finance funding is often the only and best solution.
Creating a healthier supplier ecosystem
So, many of the business giants will not change their lengthy payment terms to support your business. So, how else can SMEs ensure they have a healthy supplier ecosystem? The answer is in supplier finance. SME’s are often funding the large retailers allowing longer and longer payment terms.
To help build your inventory in a demanding time, increase your advertising to boost spending and to ensure your staff reap the rewards they deserve during a busy period of the year, having a healthy cash flow is essential for any business large or small.
Supply Chain Finance and Selective Invoice Finance, Invoice Factoring, Invoice Discounting is a fantastic SME funding option that ensures you maintain a healthy supplier ecosystem by making sure everyone is paid on time.
Supply Chain Finance from Global Asset Finance and its funding partners, you can pay your suppliers within the payment dates agreed, without it impacting your cash flow and grow your business.
So, in the time of giving, make sure you don’t neglect your own business. It is time to prepare your business with SME funding now so you can make the most of what the rest of Q4 has to offer.
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