Last time we looked at how to create a cash flow forecast for your business.
Now, let’s look at what you can do if you need additional funds to help your Christmas preparations.
Ways to supplement your cash flow
Once you understand what is driving your cash position, and you have done all you can to keep your cash where you need it, you may still find yourself short. That is when businesses look for short-term, working capital solutions, like bank overdrafts or loans. These days, there are many different sources of funding and it’s important to explore the options to find one that suits your business needs.
Another benefit of preparing a cash flow forecast is that you have time to understand your options. There is no pressure for an urgent solution, so take the time to fully understand things like:
- Convenience – do you need to visit a bank during busy office hours or spend precious time completing forms and business plans?
- Guarantees – does the provider require personal guarantees, and are these an acceptable risk for you?
- Cost – most forms of financing will cost you money. Make sure you understand the total interest cost over the period, as well as any arrangement and early-termination charges.
- Flexibility – what are the repayment terms? Do these meet your needs and how do they fit with your cash flow forecast? Is there a risk of simply creating a new problem further down the line?
- Duration– will you still be repaying – and paying interest – long after you needed the funds?
PayPal Working Capital provides sellers with an advance against future PayPal sales. Repayments are taken automatically as an agreed percentage of each PayPal transaction received.
PayPal Working Capital helped eBay Top-rated Seller
GadgetPark increase its stock and avoid disappointing customers. As founder James Washington explains:
“Every day of lost sales is a day you’re not going to get back.”
For
Comic Book Guys, the Belfast-based collectors’ comic store, PayPal Working Capital helped cover the cost of extra stock and a complete new store:
“We had a purpose-built, branded store within 6 weeks. That’s practically unheard of for a small retailer and PayPal Working Capital was one of the biggest factors in that. Footfall is up, sales are up and awareness is up. The move has brought a massive improvement in business. Christmas was fantastic and we haven’t really seen the traditional January downturn. Comic Book Guys has become a bit of a destination store.” – Aaron Flanagan, co-founder Comic Book Guys
One of the reasons businesses find PayPal Working Capital so well suited to their needs is that repayments are made as a percentage of each PayPal sale. As Andy Hall, the owner of House of Party explains:
“The best thing about PayPal Working Capital is its flexibility. If I don’t sell anything one day, PayPal doesn’t take a repayment. My business is very seasonal and no other source of funding I know of is that responsive to my turnover. It’s cheap as well, in terms of cost of funding. Why wouldn’t I use PayPal Working Capital? It’s a no-brainer.”
Other pre-Christmas considerations
As you plan for the peak period, think about the following, too:
- Security – Christmas is a peak time for sales … but also for thefts. You will be holding more stock than usual, so your business may also be a bigger target. Be sure that your physical (as well as online) security is up to scratch.
- Insurance – Similarly, make sure your insurance is adequate for the value of goods you hold in stock.
- Infrastructure – Make sure your infrastructure can cope with the sales you expect. Check your website for errors and ensure that your web service can cope with spikes in demand. Do the same for your physical infrastructure and processes.
- Logistics – can your postal processes cope with expected demand? Letting customers down with slow (or lost) deliveries is guaranteed to damage your reputation and future business.
Plan ahead for a successful Christmas
Cash flow can be a challenge in the months leading up to Christmas. To enjoy peak sales, you need to invest ahead of time in stock, staff and marketing.
If you forecast your cash flow, you can see in advance when you might need additional support. And, you have time to fully explore all the options to ensure you have the funds in place when they are required.
To learn more about PayPal Working Capital visit our website,
here.
The views provided are the businesses and not necessarily those of PayPal Working Capital.