Financial advice for seasonal businesses

It is particularly important for seasonal businesses to manage their cashflow effectively as they are more likely to face irregular cashflow patterns.

There are a number of steps a seasonal business can take to manage cashflow:

1. Plan ahead

By planning ahead, you can ensure you are able to cover any slow periods and avoid having to use quick but costly forms of finance such as credit cards.

A cashflow forecast will highlight times when you're most likely to face financial pressure. This could simply involve drawing up two lists - for money flowing into and out of the business each month. Download our sample cashflow projection spreadsheet (XLS, 29K).

See cashflow management and identify potential cashflow problems.

2. Get paid quickly

It pays to be organised about obtaining payment - this means sending out invoices promptly, chasing late payers and considering offering a discount for early payments - see ensure customers pay you on time.

3. Keep stock levels down

Carrying excess stock ties up money you could be using elsewhere. Keep records of stock levels so you can see patterns of what kind of stock you should build up - and when you need it. Estimate demand by asking your regular customers what their needs will be. Use sales or promotions to shift stock that hasn't sold well - see stock control and inventory.

4. Tighten your purchasing policies

You can improve your cashflow by agreeing better terms when buying. This might involve looking for a bulk discount, agreeing a longer than usual payment period or arranging purchases on a sale and return basis - see developing supplier relationships.

5. Put money aside

Resist the temptation to take money out of the business during your peak times - put money aside so you'll be able to meet your commitments during quiet periods. It's a good idea to set up a business savings account but do some research before you decide on a finance provider.