Cashflow tips for seasonal businesses

Map your year, week by week

Most seasonal operators "know" their pattern instinctively but don't have it written down at weekly resolution. Pull two years of card-takings statements, group them into 52 weeks, and average each. You'll see your true peak (often shorter than you think) and your trough (often deeper than you think). That spreadsheet is the foundation of every other decision below.

Build reserves during peak, not after

Set a percentage of every peak-week card takings, 10% is a sensible starting point, to a separate account that pays toward trough-week fixed costs. Doing this in real-time during the busy weeks is psychologically easier than trying to "save what's left" at the end of summer. There's never anything left at the end of summer.

Match supplier terms to your cycle

If your suppliers are all on 14-day terms but your cash cycle is quarterly, you're funding their working capital out of yours. Negotiate terms that match your trough, most suppliers will extend to 30 or 60 days for a reliable customer, especially if you offer a small early-pay discount as the "premium" option. See dealing with suppliers when cash is tight.

Pre-stock against the peak, not into it

Buying stock 4 to 6 weeks before peak instead of during peak unlocks two things: better unit pricing (suppliers reward early commitment), and freed-up working capital during the highest-margin weeks. The cash burden moves to the trough, when interest cost is lowest and any external facility's repayment shape works best with your card volume.

Have a credit line in place before you need it

Applying for funding when cash is fine is much easier than applying when it isn't. Lenders price risk better, ask fewer questions, and give larger limits to operators who aren't visibly stretched. Whether that's an overdraft, a revolving credit line, or a pre-approved MCA limit, get the relationship in place during peak.

When external funding is the right tool

External funding earns its place when the use of funds generates the takings that repay it stock for peak, marketing into a known busy season, equipment that lifts capacity. It's the wrong tool for plugging a structural gap (consistently spending more than you earn) or paying down old debt at worse terms.

For seasonal trade specifically, MCA's daily repayment %-based repayment matches your cycle better than a fixed-term loan: it takes more in peak and less in trough. The full mechanics are in MCA for seasonal businesses.

The two-question test before borrowing

1. Will this advance be repaid by takings it directly enables, within 9 months?
2. If trade was 25% softer than last year, could I still cover the daily repayment %?

If both answers are yes, external funding probably fits. If either is no, the answer is operational change first, capital second.