- Map out expected sales, anticipated costs, and working capital needs well before Black Friday and the holiday period to avoid cash shortfalls and make informed business decisions.
- Maintain a safety buffer to handle seasonal spikes, unexpected costs, and employee absences without stress.
- Explore business loans, lines of credit, or trade finance if needed, and actively control cash inflows and outflows to keep operations smooth during peak season.
As the holiday season approaches, your business might face higher employee absences, slower payments from customers, and lagging sales, all of which can bring added stress around managing your business’s cash flow.
The silver lining is, with the right planning, you can keep stress at bay and actually enjoy the holidays.
Wondering where to start? Read on as we explain how to best manage your cash flow in preparation for (and during) Black Friday and the holiday rush.
Why cash flow management matters during the holiday season
In plain English, cash flow is behind any decision you make during the holidays. Want to promote your Black Friday deals on Instagram? You nee cash flow. Stocking up on best-selling products? Cash flow. Hiring casual staff to handle peak season? Cash flow. You get the gist.
The tail end of the year comes with big cash outflows (and usually inflows too, don't worry), especially for retail businesses.
Without a cash flow strategy in place, it's easy to lose track of how much you've sold, how much you've spent, and the investments still ahead. A recipe for financial disaster.
That said, if you prioritise cash flow management during the rest of the year, you'll have the foundations to navigate November and December with confidence.
It’s mostly a matter of planning ahead and staying on top of your numbers.
The importance of early planning
We can't stress enough how important it is to do your homework, to prepare for what is the biggest sale period of the year. When it comes to cash flow, there are three key things you should do:
1. Forecast
Forecasting ahead gives you visibility and control. If you have historical data from previous years, this is the time to dig into it. Each year will be different, but basing your cash flow forecast on past performance is always more reliable than guessing.
So, get a spreadsheet open and map out the following figures:
- Expected sales forecast: Break it down weekly (or even daily during peak periods) to anticipate surges and time business decisions with confidence.
- Anticipated costs: We’re talking inventory, seasonal staffing, training, marketing and advertising, unexpected costs, and even those small but critical items like packaging or expedited shipping fees.
- Calculate your working capital needs: Look at your projected inflows and outflows to spot any periods where spending may exceed income and plan how to cover the gap.
From there, you'll have a much clearer idea of how much capital you'll need to keep operations running smoothly and handle the silly season rush—and whether you might need a loan to stay ahead.
2. Maintain a cash reserve
Most business owners can agree that having too much cash is never a bad thing. Building a cash reserve not only provides you with peace of mind, but can also ensure that you have enough money to cover upcoming or unexpected items.
A good rule of thumb is to have a cash safety stock for at least 6 months of operating expenses.
If you don’t have that much cash set aside, work towards having a few weeks of expenses covered around BFCM and Christmas.
3. Consider funding
If your projections show that cash might be tight, the right funding can help you cover upfront costs. Different solutions suit different needs:
Business term loans
Business term loans let you borrow money, often without having to offer collateral.
- Why it helps: Gives you capital to act on opportunities immediately, without draining your operating cash (or risking your business assets).
- Best for: One-off, large expenses like bulk inventory orders or a major marketing push.
Secured term loans
With secured term loans, you can brrow money and use an asset as collateral.
- Why it helps: Gives you access to higher loan amounts at lower interest rates and longer repayment terms.
- Best for: Funding bulk inventory purchases, major marketing campaigns, or seasonal staff.
Business line of credit
A business line of credit gives you access to a flexible credit limit, which you can draw on as needed.
- Why it helps: You only pay interest on what you use, so it’s cost-effective and flexible during peak season.
- Best for: Short-term gaps, unexpected costs, or small bursts of extra marketing spend.
Trade finance
With trade finance, you can cover the upfront cost of goods and repay over 2–9 months with a flat fee or interest.
- Best for: Paying suppliers upfront, while delaying repayment until your sales come in.
- Why it helps: Ensures you can secure stock for high-demand items without cash flow stress.
Merchant cash advance
With a merchant cash advance, you get quick access to capital, with repayments tied to your daily sales.
- Why it helps: Quick access to cash without long approval processes, so you can respond immediately to demand spikes.
- Best for: Short-term funding needs, like topping up inventory or hiring seasonal staff.
Not sure which loan type is right for you?
Our platform compares loans from 90+ lenders to connect you with ones that work with your unique needs, from business lines of credit to secured and unsecured business loans, and more.
We manage the paperwork, handle the application, and help get your funding sorted, so you can focus on making this holiday season your best yet. Get a quote today and be ready for peak season.
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How to manage holiday cash flow
During the holiday period, cash can move in fits and starts. Managing this effectively keeps your business running smoothly and avoids last-minute stress.
Speed up cash inflows
- Offer multiple payment options: Accept credit/debit cards, bank transfers such as BPAY, and digital wallets like Apple Pay and Google Pay. Giving customers flexibility reduces friction and helps you get paid faster.
- Streamline the checkout process: Reduce friction with one-click checkout, saved payment details, and clear shipping costs. Make sure the mobile shopping experience is also seamless—95% of Australians shop on their phone, and a clunky checkout could cost you sales.
- Recover abandoned carts: Follow up with automated emails offering a small incentive to complete the purchase. Could be enough to nudge customers over the line.
- Offer gift cards and store credit promotions: For example, “Buy a $100 gift card, get $10 free” or bonus credits for future purchases. Not only does it generate immediate cash inflow, but it also keeps customers coming back.
Control cash outflows
- Negotiate supplier deals: Some of your suppliers or service providers may be willing to give you better terms. If you've built long-standing relationships, it’s a conversation worth having.
- Manage your stock efficiently: Keep tabs on what’s selling and adjust your inventory as needed to stay flexible and avoid excess stock.
- Check where you can cut expenses: Review all outgoing costs and spot areas where you can trim without hurting your operations. Perhaps you can renegotiate leases or service contracts or postpone non-essential purchases.
