FUNDING
Accountants

Christmas in July: Are your clients ready?

The phrase Christmas in July might not be one you’re overly familiar with, but if you have retail clients they most certainly should be. 

Christmas is, of course, the pinnacle period for shopping but in order to maximise on the opportunity businesses need to get prepared as soon as possible. So as their trusted advisor, now’s a good time to check in on their plans.

This year marks the first post-Brexit Christmas, so there are undoubtedly operational and fulfillment challenges ahead. 

In this guide, we’ve pulled together four ways you can ensure your clients are ready.

1) Discuss the opportunity 

Traditional bricks and mortar stores should be somewhat used to the influx of trading over Christmas – and the subsequent implications on their cashflow. However, thanks to the huge uplift in online shopping last year, e-commerce brands and retailers also have a very lucrative opportunity to cash in on demand.

According to Retail Week, total online sales in December last year increased by a staggering 46.1% when compared with 2019, the highest annual growth reported since 2008. And it looks likely that this trend will continue, with over half of consumers intending to shop online more post-Covid than they did pre-Covid.

What’s more, the pandemic has forced a whole host of businesses to launch new online revenue streams as they’ve pivoted to cope with closures. Restaurants have created dine-in kits, beauticians are selling vouchers and products online, so you may find a number of your clients that wouldn’t traditionally have geared up for Christmas now should be.

It’s worth taking a look at your portfolio and offering an exploratory conversation to check in with clients that could be impacted.  

2) Prepare for supply chain struggles

Whilst preparing for Christmas in summer is not unusual, this year more than ever there’s a need to be organised, as retails supply chains will continue to be tested. Last year a term ‘Shipageddon’ was coined to account for the pressure on the already stretched couriers and postal services and it’s anticipated that Brexit will only add to supply chaos.

It’s worth businesses looking at what went well (and what didn’t) last year, if they have the data, to analyse where shortages or bottlenecks occurred, and how they might be avoided going forwards. 

Some brands also run sales and promotions in July to stress test their processes, (hence the phrase), so it could be worth a close look at the financials to see the impact of a big sale versus bottom line costs and if it would be feasible. 

A summer sale to create high demand would also allow clients the opportunity to test out postage costs and timeframes when supplying at scale. Being able to deliver and return quickly and flexibly will be crucial in an effective Christmas strategy. Ideally businesses will be able to invest in different fulfillment options, so customers can select a preferred delivery option but also to ensure more manageable logistics.

3) Investing in inventory

Whether your clients have a small ecommerce store, or a much bigger retail operation, having the right inventory is critical. And this may mean businesses needing to make a bold decision to invest heavily in stock to ensure they can keep up with demand.

Purchasing additional stock has a number of implications, firstly the cost of buying it upfront but also the practicalities of warehouse space to store it. 

It’s a decision that needs to be carefully considered and planned. Here’s where your expertise as an accountant could really help, and tools like our scenario planner could give you a way to easily model a number of different potential situations – and the impact on cashflow.

In Retail Week’s report, Retail Economics chief executive Richard Lim states that businesses that win the battle for Christmas spend “will be those that continue to invest strategically from the first to the final mile”. This is crucial. It’s not just about spending but spending wisely and in the right places for the best results.

4) Think about a cash injection 

Equally important to spending cash wisely is actually having the necessary cash in the first place. 

Now is the time for clients to be forward-thinking, and potentially explore their funding options so they’re in a position to upscale purchasing and cover additional supplier costs if they need to.

For a lot of businesses, they may not be aware of some of the more alternative finance products suited for these exact circumstances, like a revolving credit facility or a merchant cash advance. 

Using Fluidly, you can quickly find funding options for your clients from over 40 lenders and a wide-spectrum of products – and our funding specialists can handle the rest. 

More than anything, businesses deserve to make the most of the upcoming ‘golden quarter’, as many are still in an incredibly precarious position after the last 18 months. 

And now is a great opportunity to start a proactive advisory conversation to show you’re thinking ahead for your clients, and to help ensure they thrive this Christmas and beyond.

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