.jpg)
An SME lender has assembled a list of four key questions brokers should guide their small business clients through now, with the holidays rapidly approaching.
“For Scottish Pacific, October through to December is typically the strongest quarter for funding enquiries, as business owners look to shore up their working capital to see them through this tricky period,” said Wayne Smith, Scottish Pacific groupn executive of client acquisition.
“The sooner SMEs get the right funding in place, the more they’ll be able to focus on the business of maximising their opportunities.”
Brokers are well-positioned to talk business owners through four key questions:
If a business expects to be busier than usual, they need to ensure they’re carrying enough stock and that they have enough working capital to get extra stock on short notice if needed. Other considerations include if current cash flow allows for the possibilities of needing more staff on a short-term basis or paying existing staff for extra hours.
Conversely, some business owners are less busy over the holidays, with many shutting down across the Christmas and New Year period. However, they still need to pay wages and leave-load in advance of their sales invoices being paid. It’s crucial to work out in November how much extra one might need, and ensure there’s system in place to cover the figure.
“If you know your customers are slow payers and you might struggle to see invoices paid in January, you need to put systems in place ahead of time to cover this contingency, because you’ll still have bills to pay,” said Smith.
February typically marks thousands of small businesses stretching to the limit following the holiday period. According to Smith, now is the time for business owners to consider the full wages they’ll have to pay in February, and whether they’ll be light on cash coming in from sales invoices raised in December and January due to likely shutdown.
“I’d recommend that if businesses don’t already have cash flow forecasting in place, they should definitely move to implement this discipline for that crucial post-Christmas period,” he added.
“Even a basic cashflow forecast will clearly show you whether you will need additional funding. If your existing sources can’t cover you, do you have any other alternatives? Have you thought about other ways you could fund the business in that period?”
Smith also recommended considering invoice finance to access extra funding.
“Invoice finance provides a stand-alone facility that can sit alongside your other business borrowings (for example overdrafts, term loans, and asset finance). There are no capital repayment requirements and the facility helps you grow your business and increase purchasing power through improved cash flow,” he said.
