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How to Help Your Clients Meet Their End-of-Year Finance Needs

end-of-year business finance

While there’s much emphasis on the steps businesses should take at the end of the financial year to minimise tax and get ready for a new financial year, the end of the calendar year is also a time when businesses need funding for a range of reasons. Here we’ll cover some of the reasons why SMEs seek finance at this time of year, and how you can help.

Get ready for the busy Christmas season

Retail businesses of all sizes get a big boost in sales at the end of the calendar year.  For example, according to Australia Post, 15% of all eCommerce transactions take place between 11 November (the start of Click Frenzy Week) and 15 December. 

Retail businesses that experience a large increase in sales need to stock up on inventory. Although they have a high level of sales before Christmas, many businesses are coming out of the slower winter months and don’t have the funds to buy inventory. 

More of these businesses are using unsecured business loans as a way to stock up before their busiest time of year.

Meet staffing needs

In addition to increasing inventory, retail businesses need extra staff to handle the increased demand. Usually, staff members need to be hired and trained before sales ramp up. While extra staff can significantly add to expenses, many of these businesses won’t have the extra cash on hand until sales increase in November. In these situations, short-term unsecured business finance can enable your clients to hire more staff to keep up with higher demand.

Overcome business-to-business challenges

SMEs that sell to other businesses are often very busy before the end of the calendar year but experience a lull between mid-December and the mid-February. While they might create a healthy number of invoices for their products and services delivered in December, their customers often suffer cash flow shortages and end up taking more time to settle their accounts. In addition to not having cash flow, some B2B businesses close their doors for a few weeks, so invoices don’t get paid during this period. 

According to Xero, January is the worst month for late payments. In January 2018, for example, the average payment time for a 30-day invoice was 39 days. The beginning of the calendar year also is the worst time for cash flow. The majority of businesses experience negative cash flow (more cash going out than coming in) in January and February, unlike all other months when the majority of businesses have positive cash flow. 

Additionally, businesses that pay GST quarterly need to make their payment at the end of February just after their cash flow has bottomed out.

New initiatives for the new year

The new year is a time when business owners reflect on their results for the first half of the financial year and make plans to improve and grow. These can include expanding marketing activities, purchasing new tools, machinery and equipment, and hiring and training staff. While all these can help to grow revenue, they all require funds to make them happen.

End-of-year conversations with your clients

As the end of the calendar year approaches, some questions for you to consider are:

  • Which clients have businesses that experience a peak in sales at the end of the year? 
  • Do you have clients in B2B businesses that experience cash flow challenges in the early months of the new year? 
  • Which of your clients have growth plans that will require business finance? 

An unsecured business loan from Moula could be the solution to meet their end-of-year finance needs.


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