How To Set Up Your Business Finances for the Christmas and New Year Rush

As the end of 2019 approaches many people will be winding down and thinking about the holidays ahead. That won’t be the case for anyone running a business in the retail or hospitality sector though!

For businesses in these industries and many more, the period leading up to Christmas and the New Year is the busiest time of the year as customers and sales surge. So whether you’re running a small or medium-sized business, setting up your finances will be crucial to capitalising on the holiday rush and getting off to a strong start in 2020.

But what are the options out there? Read on for four funding solutions you’ll want to consider.

1. Take Out A Business Loan

Pros: Access to a wide range of funding 

Cons: Interest and fees 

As one of the most popular funding solutions for businesses, taking out a business loan could provide a financial boost to cover a variety of needs - from hiring extra staff for the festive period to making a big equipment purchase for the new year ahead.

And with loans typically available from a few thousand to millions of dollars - depending on a business's size, turnover and often the security it can provide - a business loan could help facilitate the kinds of ideas and need you might not be able to cover out of your own pocket. 

Wondering how you’ll be able to get a business loan in time for the Christmas and New Years rush though?

Increasingly, business lenders are adopting technology and moving to online platforms which make applications and approvals faster and more convenient, so it’s entirely possible to get the funding you need in just days depending on the lender you choose.

Of course, taking out a business loan won’t be the right funding solution for every business. For instance, a business line of credit which provides you with ongoing access to a source of funds, could be a better fit.

That’s why you’ll need to weigh up costs such as interest and fees against the benefits of a business loan, as well as comparing one to different funding and payment alternatives.

2. Make Use Of Invoice Financing 

Pros: Receive faster payments to improve cash flow

Cons: Provider fees

As any business will know, it’s not uncommon to have to wait weeks or even months for an outstanding invoice to be paid. That’s why invoice financing (also known as factoring) could be a handy solution to increasing your business's cash flow, especially during the busy festive period when you may be chasing a lot of payments.

If you’re not familiar with it already, invoice financing allows a business to receive the bulk of the money from an outstanding invoice upfront.

For example, you’ve sent an invoice to Customer A for $670. Instead of waiting for them to pay, you’d also send that invoice to an invoice finance provider, who then provides you with a percentage of the invoice total (say $550) upfront.

The invoice finance provider then receives the full amount from Customer A when the invoice is paid, and will transfer the difference to you, minus whatever fee they may charge. 

3. Pull Out Your Business Credit Card

Pros: Convenience and handy features

Cons: Interest and fees

Business credit cards are must-haves for many businesses when it comes to maintaining cash flow and covering smaller needs like paying invoices and employee expenses.

That’s why a business credit card could be particularly useful over the festive and New Year period for any business that needs a quick and convenient way to cover increased stock purchases or even to pay for events like end of year lunches or Christmas parties. 

Aside from being a convenient payment option, business credit cards often come with handy features like reward offers, cash back and complimentary insurances. 

Like a business loan, you’ll need to weigh up the associated costs with a business credit card including fees and interest - especially if you’re likely to be carrying a balance and accruing interest. In that case, it may be worth looking at a business loan with a lower interest rate, or relying on cash as an alternative way to cover your costs.

4. Pay With Cash

Pros: No fees or interest to worry about

Cons: You may not have much on hand!

If you’ve got the cash reserves on hand then putting your business savings to work may be one of the simplest and most cost-effective ways to finance smaller expenses in the run up to Christmas and the New Year. 

While you’re unlikely to have the spare cash to hire a group of new staff members or to purchase more expensive equipment, cash may be the best option to cover invoices or smaller stock purchases - if your suppliers accept cash as a payment that is. 

Given that it’s your own money you won’t need to worry about having to fork out any fees or interest which would be the case if you took out a business loan or a credit card, nor will you need to go through any sort of application or approval process to get it.