26/06/2014

By Tracy Ewen, Managing Director of IGF, a leading UK independent commercial finance company

It’s easy for small firms in the UK to underestimate the significant impact the summer months can have on their cashflow, and this year’s World Cup will only serve to exacerbate the problem.

Every summer businesses face increased delays getting invoices paid around the holiday plans of key signatories at their clients. With an increase in finance staff and senior managers taking holiday during this time, a potential slowdown in sales and the powerful lure of the World Cup to distract staff, there can be a lot of disruption to the usual working week.

Business owners, faced with knock-on cashflow shortages, often have to resort to pricey bank overdrafts to see them through or, worse still, the company credit card. When it is time to pay back the finance, business owners may find that what they thought was a good short-term solution, has actually weakened their cashflow.

The repercussions of the summer holidays could be made a lot worse for many smaller firms by the World Cup, partly because it can coordinate the holidays of several clients and cripple cashflow for a few crucial weeks early in the summer. Many small business owners may return from their own summer breaks to find that there isn’t sufficient cashflow in the business to keep them going until new orders start coming through. When orders do start to come in, they may find that there isn’t enough capital to fulfil the orders, making it harder to get back on top of their cashflow.

Small businesses may wish to consider using invoice finance – effectively, a cash advance on all invoices raised – to enable them to maintain a healthy cashflow, even in the face of payment delays.