Smart Q4 cash flow management strategies don’t grow on trees. They come from Cin7.
As a product seller, you probably consider October, November, and December (also known as Q4) are the busiest months of the year. You’re crazy busy from sun up to sun down, but you’re also anticipating the surge in sales (from consumers who are busy celebrating the season by spending their money on the products you supply) that will hopefully leave you with a tidy profit.
According to the National Retail Federation (NRF), consumer spending seems to be moving in the right direction. The 2024 holiday season boasted a record-breaking $994.1 billion, which was an unexpected 4% increase over 2023.
Great news, for sure, but only if your business is able handle the holiday spike efficiently and effectively. In a recent post, we addressed the importance of managing your inventory going into and during the holiday season so that you stay ahead of demand and avoid costly stockouts, and today, we’re turning our attention to another critical topic: managing your Q4 cash flow.
Understanding Your Q4 Cash Flow Pressures
You know that cash flow management is the process of controlling the cash flowing into and out of your business. It involves effectively tracking and balancing collections, disbursements, investments, and, unfortunately, unexpected expenses. Without smart cash management, your business won’t have the money required to pay your short-and-long-term liabilities (e.g., overhead costs, employee payroll, supplier payments, loans, tax liabilities, and more) nor grow.
To successfully manage your Q4 cash flow, you need to understand the unique pressures of the holiday season. While product businesses vary in what they sell, how they sell it, and who they sell it to, most don’t see huge fluctuations in inventory, marketing, and staffing needs and costs throughout the first three fiscal quarters, which makes it easier (not easy!) to plan for.
That all changes with the busy holiday season.
As customer demand increases, your inventory needs follow suit. However, you don’t order for the holidays when the holidays are here. You order stock in advance so that you have everything prepped and ready when the holidays arrive, which means you’re tying up a large chunk of change early in the year.
You’re also anticipating spending spikes on special marketing and promotional materials, which are geared towards grabbing Black Friday and Cyber Monday shoppers’ attention, while factoring in increased staffing costs for seasonal workers and overtime. Plus, watching your cash go out (with the goal of bringing cash in) may raise concerns about delayed payments from customers (especially B2B customers who often take more time to pay due to larger orders and complex approval processes).
Strategies for Smart Cash Flow Management
It's a lot to take in, but there are a few tried-and-true strategies that can help you master your cash flow management needs, starting with the delayed payments.
1. Avoid Delayed Payments with Cin7 Pay
With Cin7 Pay, your B2B customers enjoy our embedded global payment solution powered by Stripe. Unlike traditional payment methods, Cin7 Pay provides seamless one-click invoice payments, industry-low rates, and a full suite of payment options, including ACH, digital wallets, Buy Now Pay Later, and more, making it easier for them to pay you faster. Faster payments equals financial liquidity, regardless of what time of year it is.
As a single payment solution, Cin7 Pay also helps you manage the holiday-induced higher sales volume by removing the need to transfer payment information between disconnected systems, which eliminates costly and time-consuming errors.
2. Build a Cash Flow Forecast Specific to Q4
Predicting demand is vital if you want to optimize inventory, make wise financial decisions, and satisfy your customers. By using sales forecasting tools, like Cin7 ForesightAI, you can predict demand, including seasonal demand, based on historical data up to 24 months in advance.
Advanced forecasting lets you schedule critical supplier timelines and keeps you informed of the exact inventory coming your way. It can also help you plan for your increased inventory, marketing, staffing, and fulfillment payments that come with the holidays. Consider staggering these payments (if possible) so that you can distribute your cash flow more effectively, avoid cash flow shortfalls, and help you take care of unexpected costs, such as returns, stockouts, shipping delays, and more.
3. Keep Inventory, Purchasing, and Payments in Sync
Keeping inventory, purchasing, and payments in sync is another cash flow management strategy. ForesightAI can help you:
- Minimize overstocking (overstocking ties up cash)
- Time reorders perfectly with real-time inventory data and smart reorder points (even without ForesightAI, customers can use Cin7’s minimum reorder functionality as well as set up an automated alert/email when a product goes below the pre-set threshold)
- Align purchasing with real-time sales data via Cin7 automation
4. Access Flexible Funding with Cin7 Capital
Let’s say your cash management strategies are working, but you still need increased cash flow because you’ve offered a stupendous deal and your product is flying off the shelf or you’ve nabbed a celebrity endorsement and your product has gone viral. Look no further than Cin7 Capital, a non-traditional business funding option.
With Cin7 Capital’s invoice financing, you can get an upfront loan, putting cash in your hands while waiting for customers (who have net 30/60/90 day terms) to pay you. The funding can be accessed by applying directly within the Cin7 platform, eliminating complicated, takes-forever bank paperwork. You can expect a response to your application within three days, and this fast and simple funding, which considers your business performance as well as your credit score, puts you in the driver’s seat. And you can take what you need when you need it, without locking yourself into long-term, high-interest rates.
Use Cin7 to Tighten Operations and Improve Cash Flow
Though it’s months away, Q4 should already be on your radar. The cash flow pressures brought by the holiday season should be addressed now so that you can have all your inventory, marketing, and staffing needs met before the season is upon you. And by getting in ship-shape with help from Cin7, your business will be ready for anything the economy, your customers, and the market throw your way—something to which Cin7 customer Erica Easley, founder of Gumball Poodle can attest to.
The Gumball Poodle team loves Cin7’s inventory visibility, which allows them to handle large, last-minute orders as well as manage their seasonal spikes in sales.
“[With Cin7], it’s super easy to drill down on information about individual SKUs and track what’s going on with all our different products. It keeps our Shopify and Faire inventories updated in real-time, which is so nice, especially during busy seasons,” Erica says.
She also says Cin7’s inventory tracking and sales forecasting features make keeping socks in stock a breeze. “We’ve been very consistent at carrying the correct amount of inventory for the 18 months we’ve been on Cin7. And that’s a huge win.”
It is a huge win, and so is the fact that all Cin7 customers can improve their cash flow management with Cin7’s automated order-to-cash processes for faster fulfillment (and faster payment), their ability to sync inventory and sales across channels (thus reducing costly over-and-undersells), and the real-time insights they can use to make faster, smarter cash decisions.
There is no better time than now to get ready for Q4, and in the process, become profitable all year round. Learn more by requesting a free demo today.
