Five tips for SMEs to prepare for the peak retail season

With consumer spending, consumer confidence and business confidence all increasing in Australia, the stage is set for a profitable period for small to medium enterprises over the peak-retail festive season. 

But all too often for business owners the holiday season can be a double-edged sword, with a key period of revenue and sales growth cutting against the challenges of juggling of stock, employees, annual leave and cash flow.

" Often for business owners the holiday season can be a double-edged sword."
Kate Gibson, General Manager Small Business Banking, ANZ

Even after the rush of Christmas and New Year, businesses can face a shortage of cash –stock may not have moved as quickly as expected but invoices and holiday wages still need paying. So how can SMEs ensure they are not caught short of cash over the festive period?

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A well-thought-out plan is crucial to help SMEs get through the weeks and months ahead while keeping an eye on the core strategy. Most importantly, extra stock will be required for the turnover expected over the busy period – the question is, how much?

For business owners in need of extra stock, consider how you should pay for it and any additional costs. If you decide to pay cash, how will this impact your cash flow?

You should also factor in key suppliers and any large customers who may pre-order goods on extended payment terms to ensure you will be paid promptly.

Even though it’s a busy time, it’s important to not fall behind in your administration to ensure you’re receiving your cash on time. Consider if you’ll need additional help to keep on top of all paperwork, invoicing and administration.


As well as keeping on top of paperwork, there are a number of other things businesses can do to encourage customers to pay promptly and allow the business to maintain a strong cash position.

Firstly, set up systems to remind debtors about payment terms when payments are due. This may be colored invoices, follow-up phone calls or email reminders and will ensure you are front of mind when they are paying their bills.

For large once-off or bulk orders, consider taking an upfront deposit. This will mean you don’t have to fund the production costs solely from your cash flow, saving your cash for other needs.

Also, would you consider offering a discount for early payment? Early payments may give you the comfort that you have cash in the bank, even though you get slightly less margin.


It‘s vital for SMEs to work with accountants to determine the best payment terms for businesses and suppliers, as well as the best possible timing of invoice payments while not compromising your working relationships.

It may also be possible for you to negotiate a discount for upfront or early payment, but ensure you consider the impact of the timing of this payment and your ability to manage this cash outflow at the time.

Alternatively, speak with your suppliers and negotiate extended payment terms. If you have a history of reliable payment, some grace at this time of year may give you cash flow relief at a critical time.


In considering cash flows, business owners should think about bridging any gaps at an early stage. The earlier this is addressed, the more time businesses have to speak with financiers and reorganise if necessary.

There are a number of solutions which may work to bridge a short-term working capital requirement including an overdraft or debtor finance. Alternatively, if a long-term financing solution is required, a solution with a longer pay-back period might be better.

Often a financier will need up-to-date financial information such as BAS statements or full year accountant prepared financials, so ensure you have this information handy to provide if required.


According to Xero research last year, less than one in five businesses are using last year’s figures to forecast for this year’s Christmas season. They should. Understanding how cash ebbs and flows over the year allows businesses to be better positioned to forecast demand and supply.

A strong point of sale or accounting software package helps businesses track sales (money coming in) and payments made (money going out). You can then use this information to determine stock levels, cash requirements and profitability.

Most banks, including ANZ, have the ability to integrate transaction data with accounting packages and together with anecdotal feedback (the weather, interest rates, competitor behaviour), you should be able to build a plan and a cash flow forecast for the upcoming festive period.

These five tips – planning, collecting cash quickly, holding onto cash, bridging the gap early and forecasting – should help all small to medium businesses alleviate cash-related stress over the coming festive season. Good luck!

Kate Gibson is General Manager Small Business Banking at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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