B2B Payments

Holiday Cheer Isn’t Enough To Aid SMBs Through Cash Flow Issues

Between Small Business Saturday and the gift-giving holidays, this time of year is one many assume to be lucrative for small- and medium-sized businesses (SMBs). But not every small business will benefit from a sales bump during the pre-holiday shopping season, and even those that do see a surge in sales will have their own cash flow challenges to consider as they invest in inventory and staff to keep up with demand.

In short, the holidays aren’t an automatic win for many SMBs, and cash flow challenges don’t just go away.

According to a recent survey by accounting software and business solutions provider MYOB, 77 percent of Australian small businesses said they’re actually predicting no growth for the Christmas period — and 18 percent even said this time of year will probably be quieter than last year’s holiday season.

MYOB found that one of the largest challenges for SMBs during this time is rising competition from large retailers, especially those that enter the market overseas. On top of that competition is the weight of unpreparedness: Only 37 percent of SMBs surveyed by the Australian SMB accounting firm said they started planning for the holiday season two months ago, and a third said they hadn’t planned ahead at all.

That’s disappointing, especially considering separate research from online payments service provider WePay released earlier this year, which found 20 percent of revenue for U.S. small businesses is earned between Thanksgiving and New Years Eve. The figure suggests the holiday season can certainly be a lucrative one for some businesses, especially those selling goods rather than services, researchers said.

MYOB also noted that cash flow concerns were top-of-mind for Aussie SMBs, cited by 39 percent of survey respondents. Operating costs were a close second, cited by 37 percent. In addition, more than one-quarter agreed that technology could be instrumental in helping them manage cash flow.

Yet, while small businesses in MYOB’s survey acknowledge they aren’t prepared for the holiday season, aren’t optimistic about growth and know the importance of cash flow management, just 12 percent said enhanced cash flow management would be a focus for the new year.

Cash flow concerns seem to be commonplace for businesses in other areas, too.

WePay’s report found more than one-fifth of U.S. SMBs encountered late B2B payments problems towards the end of last year, and that fraud and chargebacks during the holidays can also threaten cash flow.

Separate data from Barclays released Monday (Dec. 18), covered by P2P Finance News, noted U.K. SMBs are struggling with cash flow management, too. Like WePay’s research, Barclays also found small businesses are struggling with late payments. Nearly one-third reported being concerned about late and delayed B2B payments, and more than 10 percent said they have even considered giving up their businesses altogether because of this issue. One-quarter said the ability to agree on payment terms with their corporate clients is a top solution to their cash flow and working capital struggles.

“Our research shows that working capital is a top priority for many [SMB] decision-makers, with almost two-thirds saying cash flow keeps them awake at night and a third indicating it has impaired their ability to grow,” said Marc Pettican, managing director of Barclaycard Commercial Payments, in a statement. “This situation is wholly preventable with the right support, and we encourage small businesses to explore how they can reduce the time and energy they spend on managing working capital problems.”

According to WePay, late payments can threaten SMB cash flow all year, but,  this issue can be particularly acute between Thanksgiving and the New Year. More than half of SMBs responding to the WePay survey said they had to follow up with late-paying customers at least twice, and two-thirds said at least 10 percent of their own customers do not adhere to payment term agreements.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.