As the colder, darker weather appears, for many it is a time to hibernate but for small businesses, the run-up to Q4 is anything but sleepy. With Black Friday around the corner and Christmas fast approaching too, now is the time where small businesses have a fantastic opportunity to increase their profits. However, Q4 is not always an easy time for small businesses and a busy period can create serious cash flow struggles. 

Sales are up – So why do small businesses struggle?

Yes, in general, sales increase during the last quarter of the year thanks to increased shopping and sale periods such as Black Friday, Cyber Monday and the Christmas/Festive sales. 

However, small businesses who sell directly to customers often cannot compete with big retailers when it comes to slashing the cost of must-have sale items. Large retail chains can and do make a considerable profit from Black Friday sales because they are able to offer fantastic deals. Something that may not be feasible for small businesses to provide. 

Another issue for small businesses is when they supply the larger enterprises. Big retailers typically demand much more stock for Q4, yet even with bigger orders, the lengthy payment terms still prevail. This means small businesses often have to recruit more team members, create more stock and ensure it reaches their clients without seeing a penny of the order money until the next year. 

For small businesses, building up this level of cash flow in order to recruit and pay staff on time as well as building up an inventory of stock is unfeasible at this challenging period of the year.  In fact, purchasing more inventory was a top expense in Q4 for 41% of small businesses while small businesses also increase their advertising spend by 25% at this time of the year. 

With costs quickly mounting, for small businesses to thrive and survive this time of year, SME funding is often the only solution. 

Creating a healthier supplier ecosystem

So, many of the business giants will not change their lengthy payment terms to support your business. So, how else can SMEs ensure they have a healthy supplier ecosystem? The answer is in supplier finance. 

To help build your inventory in a demanding time, increase your advertising to boost spending and to ensure your staff reap the rewards they deserve during a busy period of the year, having a healthy cash flow is essential. 

Supplier Finance is a fantastic SME funding option that ensures you maintain a healthy supplier ecosystem by making sure everyone is paid on time. With Supplier Finance from GapCap, you can pay your suppliers within the payment dates agreed, without it impacting your cashflow. 

When you receive the invoice from your suppliers, you upload it onto our system and GapCap will pay the supplier on your behalf. Then, when you receive payment from your clients, you can repay GapCap at a more convenient time, without negatively impacting your cashflow system. 

So, in the time of giving, make sure you don’t neglect your own business. It is time to prepare your business with SME funding now so you can make the most of what Black Friday and the rest of Q4 has to offer.