For many SMEs, the holiday rush is a hectic, but also very rewarding time to be in business. This seasonal boost doesn’t reach into all industries, however. Some businesses need to tighten their belts and work to find ways to deal with an annual holiday slump as employees, suppliers, and clients disappear to take care of their own seasonal concerns.


Often, this translates to late client payments, operational disruptions, client loss, and a general decline in sales. Unmanaged, this can seriously impact December revenues and check a business’ growth for months afterward. Your business’ costs don’t take vacations, and there are still holiday bonuses to pay out. Unless your business has exceptionally deep pockets, you may well find yourself searching for additional sources of funding to make ends meet.

Choosing the right kind of solution for your symptoms

Different kinds of seasonal problems have different appropriate financing responses. For example, a business that’s primarily suffering from late payment issues might get better results from invoice financing than one who is trying to manage operational disruptions. To react appropriately, businesses need to know exactly where the trouble lies.

Tackling issues with accounts receivable

A business that’s suffering from late payment issues is dealing with an inherently temporary problem. Whether you work with other businesses or regular consumers, customers often don’t think ahead to manage payments effectively during the holidays. This means suffering through a lean December, but that delayed revenue that will generally arrive some time in January. To survive, you can simply use invoice factoring to generate funds using those same outstanding bills. Effectively, you can trade in a clients’ outstanding debt for financing in the amount of those missing funds, less a small fee.

Slumping demand

Some business don’t have invoicing issues to worry about, but simply can’t make the sales they need to make ends meet. For example, restaurants often see up to 20 percent fewer customers during the holidays than during other times of the year. That’s because the holidays are culturally associated with home-cooked meals and time spent at home with family. The revenue lost here isn’t easily recoverable, and restaurants obviously don’t issue invoices that could be financed. Instead, they can try to cut costs by offering extended holiday leave to employees, or resorting to putting some workers on furlough. To come up with additional funds, they may need to rely on small business loans, or tap into a line of credit.

Operational disruptions

An issue that is often overlooked by businesses who don’t expect serious cash flow disruptions is the toll that the holidays can take on their operations. It’s not uncommon for a small business owner to show up to work in mid-December, only to realise belatedly that one or more key employees have already left for the holidays. Depending on the situation that could be an inconvenience, or it could force production to grind to a halt much earlier than intended.

The obvious-in-hindsight solution to this issue is to prepare ahead of time and ensure that vital roles remain filled as long as needed throughout the month. Of course, it’s sometimes simply too late to make adjustments, leaving business owners to look for ways to minimise delays and get back on track after the holidays. Temporarily expanding your business’ output capacity while you’re playing catch-up will almost certainly require additional investment. Fortunately, there are a lot of fast-access short term financing options available that business can take advantage of, from invoice factoring, to small-scale business loans.

Protect your suppliers

While trying to keep your business running in all the holiday chaos, it’s easy to lose perspective and forget about your suppliers. It’s important to remember that if you’re dealing with a seasonal slump, your suppliers probably are as well. To ensure that you can continue to provide consistent service after the holidays, it pays to offer whatever help you can to ensure that those partners survive. Fortunately, even businesses that are facing financial difficulties themselves can provide that support using supply chain finance.

Supply chain finance allows businesses to collect payments for goods or services early in exchange for a discount. If a supplier needs to come up with funds to deal with a cash flow issue, they can negotiate an advance using this system. Best of all, those early payments won’t need to come out of your business’ already thinly stretched capital. Instead, they’re drawn from an investor furnished credit fund that you hold with your financial institution. Your own payments can then be made when the bill comes due, or deferred to a later time.

The holidays are a chaotic time for all kinds of businesses. While some are trying to accommodate the rush, others are struggling to keep everything together. For businesses in both kinds of situations, Fifo Capital offers the cash flow solutions they need to make the best of the holiday season, and to prepare for a new, profitable year.