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Welsh businesses asked to think carefully about their cashflow this Christmas

Amanda Dorel, regional director for Lloyds Bank Commercial Banking in Wales, discusses the practical ways in which local businesses can get themselves in shape for the festive season.

Whisper it quietly, but this month saw us cross the threshold and enter the 100-day countdown to Christmas. While for consumers the festive season may feel a long, long way off, many businesses across Wales will be deep in planning as they gear up for one of the busiest trading periods of the year.

From the hospitality businesses through to the retail sector, December’s celebrations are a major undertaking. But with retail sales dipping last month, getting their strategy right at Christmas has become increasingly pressing for those set to benefit from the festive rush.

While there are added pressures to consider, by taking steps to ensure they’re in the best possible financial position before the festivities, firms across Wales can expect to be more than happy once the season finally arrives.

The gift of liquidity

The logical place for business owners to start, particularly SMEs, is to focus on cashflow and working capital to ensure their finances are fighting fit for any uptick in trade. In a sign of the challenges facing management teams, our latest Working Capital Index found that businesses across Wales have a total of £6.4 billion tied up in excess working capital – money that could be released and used when firms need it most.

Closely managing working capital will not only help firms respond to sudden short-term challenges but also enable them to make important strategic decisions quickly. For example, extra staff and stock may be required to match demand and all suppliers will be keen to ensure they are paid on time during what is an equally critical period for them.

When firms do need a helping hand, financial products such as arranged overdrafts, business credit cards or invoice and asset finance can help them to avoid developing pressure points within their operations. If businesses are after more sizable or long-term cashflow requirements, asset-based lending can also help to protect working capital by unlocking the value tied up in stock or property, providing access to money that may have already been invested in the business for the festive period.

Unwrap your potential

For many new and smaller trading businesses, understanding and forecasting how their working capital will ebb and flow can be daunting. But with a little help, businesses can assess their chances of over- or under-trading and seize the opportunity the festive period presents with confidence.

As part of our commitment to helping Britain prosper, we’ve worked by the side of businesses to develop a specialist working capital management tool that allows them to evaluate their cash flow and collection cycles. In turn, they are able to more easily identify where any pressure points lie.

This provides businesses with an increased understanding of their financial picture and allows them to assess whether they will need to take steps to improve their cash flow before investing in assets such as extra staff or stock. 

Many are already putting it to good use while recognising that good cashflow is not just for Christmas.

Lloyds Bank has pledged to provide £1.1 billion to firms across Wales this year and will be continuing to support the growth plans of SMEs throughout the Christmas period and beyond.

By making use of the support on offer, Welsh businesses can have peace of mind as they revel in the festive cheer and aim to end 2019 on a high with a boost in sales.