By Marcus Leach
Small firms in the UK should view the run-up to Christmas and the first few weeks of the New Year as one of the most dangerous times of the year to experience cash flow problems, warns IGF, one of the UK’s leading independent commercial finance companies.
Cash flow can suffer over Christmas because many finance staff and signatories (Company Directors) take holiday over the season, and also because unauthorised sick days increase at this time of year due to party excess and illnesses.
Small businesses should consider invoice finance — effectively, a cash advance on all invoices raised - to enable them to meet the challenge of any potential cashflow problems that arise over the Christmas period.
“The Christmas period and the first weeks of January are often a critical time for small businesses — almost as many managing directors, clerical assistants and finance department staff are on holiday over Christmas and the New Year as during the summer," Tracy Ewen, managing director at IGF, warns.
"As a result, payments don’t get made, cheques don’t get signed and small businesses often experience real problems with cashflow at this time.”
During the festive period, many business owners have to resort to costly bank overdrafts to see them through or, worse still, the company credit card, both of which can exacerbate their weak cashflow positions in the short term.
“The inevitable hangover after Christmas could be a lot worse for many firms if they come back after the break to find that there isn’t sufficient cashflow in the business to keep them going until the New Year’s new orders start coming through,” she added.
"We see this problem getting worse every year, and it can definitely be a contributing factor to the number of start-ups, micro-businesses and even established small firms that go under in the UK.
"IGF is aware of the additional pressure that the festive season places on our clients’ cashflow and in order to help them we do have the ability to offer additional assistance. December can be a difficult time and we are keen to ensure that our clients can have a peaceful and stress-free Christmas."
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