After the summer lull, it’s time to get back up and running—and, let’s be honest, it’s really tough!
Summer is always a difficult time for businesses: vacations, low sales, store closures, and the increased risk of non-payment make these months more challenging for most companies (though it’s true that some sectors experience higher activity during this time, such as tourism and the restaurant industry).
In this particularly uncertain climate, alternative financing offers a potential solution to your liquidity problems.
Liquidity is the amount of assets you can quickly convert into cash.
On the other hand, solvency is your ability to meet those payments.
Both concepts are essential for ensuring sound financial health.
Any organization—especially small and medium-sized businesses—relies heavily on these indicators.
In the summer, many companies put payments on hold due to a drop in sales.
This can lead to problems if they don’t have a solid plan for collecting payments.
In reality, it’s easy to understand what’s happening. You just need to analyze how the main factors that occur in the summer influence the situation:
Staff availability and operational capacity are reduced.
Employees are entitled to vacation time and, for a certain period, stop performing their duties.
This may require covering their responsibilities, either through their coworkers or by hiring new staff.
The first option is used when business volume declines; the second, if it remains steady or increases.
In either case, this entails significant fixed costs.
Except in certain sectors that benefit from summer seasonality, economic activity slows down during this time of year.
It is common for revenue to decrease considerably.
Consequently, revenue declines.
For some businesses, low summer sales result in losses if the business remains open.
For this reason, many companies choose to suspend operations entirely during the vacation period.
While it is true that certain expenses are reduced, others remain, such as payroll and fixed costs.
This summer period can also lead to your customers failing to meet their payment obligations on time and in full, which can increase your delinquency rate—with all the risks that this poses to your business.
As we’ve seen, continuing operations and having the necessary financial resources to invest in and grow your business can become challenging after the summer.
What can we do about it?
Anticipating the problem, identifying it, and taking appropriate action is essential for business financing, especially during periods of uncertainty like the summer.
Here, you can find more information on how to improve your company’s cash flow.
Bank loans are one option, but alternative financing offers a faster solution to address potential liquidity issues.
Do you know what promissory note discounting and factoring (or invoice advance) entail ?
If your customers pay you with these payment instruments and you need the money immediately, at Workcapital we can help you receive payment in advance when you need it.
Factoring — or invoice financing —is also an attractive option when sales are low in the summer.
It involves selling the rights to collect payment on one or more invoices to an alternative financing provider.
This way, you can access the funds when you need them most.
These are just a few examples of unconventional business financing options.
There are many more that can be tailored to your specific needs.
To do so, contact us: at WorkCapital , we specialize in alternative financing methods.
We work side by side with you, put ourselves in your shoes, and offer you a customized solution.
You’ll see how much easier the post-summer period becomes with us by your side!
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