The inventory calendar drives the bank balance
Most retailers sell far more in a few weeks of the year than in the other months combined, but their bills follow a different schedule. Seasonal inventory is bought months before it sells, and suppliers expect payment well before the shoppers show up. In between, the store has to pay rent, staff and utilities out of whatever comes in on ordinary days. An owner in this position is always managing the lag between buying and selling.
A year in four stages
| Stage | What happens to cash |
|---|---|
| Post-holiday | Sales drop, returns come back, holiday suppliers still need payment |
| Spring | Reorders and new lines are bought; sales are moderate |
| Late summer | Holiday stock is ordered, with deposits due |
| Holiday | Staffing rises, marketing peaks, sales finally arrive |
If a store buys holiday stock with its own cash, the account may be at its lowest just when the shelves are fullest.
What a stocked floor really needs
A shop cannot sell what it does not have on the shelf. Underbuying a popular item means lost sales, and overbuying a slow one means markdowns. Owners also pay for fixtures, displays, point-of-sale systems, signage and sometimes security. A store that sells online as well needs photography, shipping materials and storage space. Opening a second store multiplies every one of these costs before the second store has a single customer.
Where owners put funding to work
- Early purchasing for holiday or seasonal lines
- Remodels and fixtures that improve the shopper's path
- A second location or a pop-up
- Seasonal payroll for the busy weeks
- Marketing in the weeks before the peak
Rent and the slow weeks
Retail leases are one of the few costs that do not move with sales. A store in a strong shopping area pays a premium for foot traffic, and that cost arrives in good weeks and bad. Many owners find that the January and February period is when cash is the hardest to manage, because holiday suppliers are still being paid while customers are slow to return. Planning a cushion for that period is as much a part of stocking as any purchase order.
A worked example, for illustration only
For illustration, an owner wants to bring in $50,000 of additional holiday inventory in August, with payment due by September. Most of the revenue from that stock arrives between mid-November and the end of December. The owner is out of pocket for about three months. Working capital allows the full order to be placed on time. These figures are not our terms or a typical result.
How to apply
If your best weeks depend on stock you have to buy before they begin, a funding decision based on your bank deposits can cover the early purchase. The application takes about five minutes. We ask for roughly three months of business bank statements and use a soft credit pull; no tax returns are required. FICO 500 and above is considered, funding runs from $25,000 to $5,000,000, and money can arrive in as little as 24 hours. Sole proprietors can apply. Start your application.