Is Your Business Ready for the Christmas Cash Flow Crunch?


David Beaumont is regional director for Lloyds Bank Commercial Banking in Wales

Christmas can be a gift for many Welsh businesses, but the festive period can also put enormous pressure on cash flow.

Whether it’s the buzz of Cardiff’s Christmas markets, or the peacefulness of Snowdonia, Wales attracts a seasonal surge of tourists over the festive holidays.

To cope with this increase in demand, many firms need to buy extra stock or hire seasonal staff, which all have high costs associated with them.

Add to that the fact that payments from customers are often slower during December and many firms will see their access to cash squeezed, putting a real strain on finances.

This pressure has grown in recent years as Black Friday and Cyber Monday have firmly established as key moments in the commercial calendar and drawn the Christmas trading period out over an even longer time.

Covering day-to-day costs

The fact that the festive season now starts earlier and lasts longer makes cash cycles even more lengthy, particularly for retailers, and means covering the day-to-day costs of running a business increasingly difficult.

Those in the supply chain will have had to manufacture and deliver goods already, paying out for raw materials months ago, but may not get paid until the New Year, while the hospitality sector will also need to pay the extra staff they need before receiving payments from customers.

Even other sectors not immediately affected by the festivities may see production decrease and income fall as staff take time off to spend with their families, but regular payments like wages, loan repayments and rent must still be made.

Pressure on payments

This year, businesses were already under increasing pressure to manage their working capital even before the Christmas rush began, especially smaller firms.

Our research found that the average time taken to pay suppliers now varies from 24 days to 69 days and a third of all invoices are reported as being paid later than agreed terms.

So how can businesses ensure they have the working capital they need in place for the festive period?

Advice can identify pinch points

In these periods it is always best to get advice from a trusted adviser and look at your cash flow situation in detail to identify any potential pinch points.

Speaking to your bank can also help you with funding so the sudden spike in demand or pause in payments doesn’t leave you struggling.

Invoice finance and asset-based lending, for example, can be valuable resources for businesses that need to access cash quickly and flexibly.

Seasonal solutions

Invoice finance allows firms to access up to 90 per cent of the value of an invoice within 24 hours of it being issued, guaranteeing that funding will be available, even if a customer has taken time off for the Christmas holidays, for example.

The more invoices you issue, the more cash you can access, helping hedge against any delays in payment.

Another solution is asset-based lending, which allows businesses to access the capital they have tied up in extra stock, as well as plant, machinery or property, which can then be used to buy more stock or pay seasonal workers.

Act early, reap the rewards

For Welsh businesses, Christmas is a time where costs can increase significantly – but so can profits if enough preparation is done beforehand to manage working capital.

Working out what is the best solution for your business early will help you tackle any cash flow issues before they affect your day-to-day activities.

With the right support you need in place, you can then focus on providing a fantastic service to your customers and making the most of the opportunity that Christmas presents without having to worry about paying the bills.


Over the past 6 years, Rachel has been working specifically within the digital marketing space and has worked with some of the country’s top brands. During this time, Rachel was a key attribute to the success of our sister product, Recruitment Buzz, which has firmly established itself as one of the leading publications within the Recruitment sector. Drawing on her knowledge and experience, Rachel has developed a genuine understanding of how content can engage and compel an audience.

Having a passion for travel and culture, Rachel left her hometown of Cardiff to pursue studies and travel and after several years away, Rachel returned to Cardiff and firmly established herself within the development of Business News Wales. Rachel is now responsible for every aspect of web management, marketing and overall production of the Business News Wales brand.

Having learnt some invaluable skills within the marketing industry, Rachel is often called upon for her skills and knowledge of WordPress, HTML, email marketing software, Photoshop design and social media tools.


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