By
Bob Phibbs
The holiday season is about to begin, and every retailer is glad for it because cash flow will seem to get better.
This post is more about where to spend that cash flow than how to hold onto it.
That's because, as I stated in last month's revenue flow post, revenues will increase for the next few months, profits will blossom, and any cash flow strain will become a distant memory. Even with the supply chain challenges this year, most retailers will realize most of their profits in the last quarter.
Still, the prudent retailer will take the opportunity to plan for the leaner months that will follow in the New Year after the party's over.
5 Cash Flow Tips For Retailers In October
Revisit Your Annual Budget
Examining your current budget and a revision based on actual results will give you a more realistic snapshot of the coming months. If you are overbought, don't hope it will all sell - figure out promotions so you are lean in January. For better or worse, you can plan your revenue and expenses accordingly. You can scale back if you anticipate lower revenues or expand your product line if you are having a great year. Either way, your business will be better prepared to serve your customers accurately.
Invest in Tax Planning
The tax guy always comes at the worst time. Now is the time to face the issue straightforwardly.
Simply knowing your potential liability is half the battle. It is imperative to be proactive about these matters and reserve the proper amount of funds, as the IRS can shut you down if you fail to meet your obligations. And whatever you do, you must pay your quarterlies on time!
Take Advantage of Vendor Discounts
Large inventory purchases are the norm for his time of the year. If funds are available, take your vendor discounts for early payment. The ROI can be significant and boost profits enormously. Any temporary squeeze will be loosened over the next few weeks. In addition, you’ll gain some good cred with your vendors.
Make Large Purchases before Year End
Aside from lowering your overall tax liability, purchasing new infrastructure or other business-building items is an investment in your business at a time that will yield the greatest results.
Certainly, these purchases should be planned out ahead of time and consider cash flow, so be sure to make a wish list at the beginning of the year and be ready to act if the money becomes available in October.
Pay Down Debt
It's always a good idea to pay down expensive credit cards, especially when the payments will not put a crimp in your other business plans. Like vendor discounts, the monies saved on interest can significantly strengthen an otherwise anemic bottom line.
A Final Thought
October is when you, as the owner, see your business thrive. There is plenty of stress and some aggravation, but these cash flow tips should be taken as your opportunity to boast your profits as a retailer.
Looking ahead, planning, and taking advantage of opportunities at this time of year can make all the difference between celebrating the New Year and becoming despondent. Choose now so you will be happy.
