Top tips for successful Christmas trading

Tracy Ewen, managing director of IGF Invoice Finance, discusses how independent retailers can avoid the winter blues and enjoy a prosperous Christmas this year.

The build-up to Christmas is one of the most exciting times of the year for the lingerie industry, but for those in charge of managing finances, preparation is a must in order to flourish. The winter season brings a number of financial challenges that can be easily overlooked when retailers are focusing on maximising sales.

Forward planning for this period is essential. Sales volumes can be unpredictable, so it is vital to have a flexible finance plan in place well before the festive season approaches. Businesses must not associate higher sales with better cashflow.

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If large proportions of sales are made on credit, this leads to an increase in accounts receivables, not cash. Keeping a reserve of flexible funds will help with any necessary stock purchases or customer returns during this hectic time of year. Christmas may be the giving season, but don’t expect all of your suppliers to pay on time.

The challenges of stocking up

In order for independent lingerie retailers to keep up with the likes of high street staple Ann Summers and American heavyweight Victoria’s Secret, stock levels must be increased exponentially during this period.

Lingerie retailers may find that some of their suppliers decide to shut up shop over the week of Christmas. As such, it’s important to make sure that any orders will be completed in time, especially with demand being so high over Christmas.

At this time of year, having access to a flexible level of finance, particularly if it’s linked to the volume of sales, can help many independent retailers avoid having to resort to unsustainable financing options. Relying on costly bank overdrafts or company credit cards to see a business through or, worse still, the company credit card, can exacerbate cashflow problems, and can be avoided by exploring alternative finance solutions.

It’s also important to remember that some level of returns following a high period of sales is always to be expected, particularly if customers are unaware of the correct sizes needed for their partners’ gifts. Smaller lingerie retailers should therefore set aside a proportion of their takings at this time of year for refunds, and should also be prepared for the customer service requests that come alongside returns moving into the New Year.

Discussing issues like these with a financial expert will enable retailers to consider their options. Seeking advice can only inform a business owner.

Many professional finance providers offer free advice, backed by many years of diverse experience as a free add-on to the paid-for financial services that businesses use every day. Making use of that advice can save time and money where it’s needed most.

Managing temporary staff

Smaller lingerie retailers can often find it tricky to deal with the spike in sales over the winter season, especially if a number of employees fall ill or are taking a long holiday over this busy period.

One way to tackle the staff deficit is to hire temporary employees to keep the business ticking over. Without the right level of preparation, however, this can also put a major dent in a retailer’s bank balance.

For a start, it’s likely that staff – both permanent and temporary – will be required to work extra hours to accommodate extended Christmas opening times or to cover other staff absences. As such, retailers will need to consider the costs involved with providing overtime pay rates.

Of course, temporary staff will not only need to be paid, but will also require training to get fully up to speed with existing employees. Implementing a mentor system is a great way for new staff to settle in quickly, since being trained by existing staff is the easiest route to new joiners performing well right off the bat.

It’s also important to bear in mind that any temporary staff will need the same benefits as permanent ones, whether that’s a limited number of days’ holiday or access to particular facilities. Retailers must also take insurance into account when hiring temporary staff; as soon as a new member joins the team, employers’ liability insurance must cover them in the case of an accident or injury at work.

New Year, new challenges

After all the excitement of Christmas, retailers may start the New Year with an unwanted gift: a stack of unpaid invoices. With nobody available to authorise payments over Christmas, smaller retailers will often have a backlog of invoices waiting for them in January.

Payment due dates can slip due to many managing directors, clerical assistants and finance staff being on holiday at this time of year, meaning that lingerie retailers can often experience real problems with cashflow. This will mean that careful financial planning will continue to prove crucial moving into the New Year, as it’s important that smaller and independent retailers never let any outstanding invoices slip through the net.

The winter season clearly brings both highs and lows for the lingerie industry. Taking steps to ensure a healthy, steady cashflow over the coming months will allow retailers to reap the rewards of the busy run-up to Christmas.

Remember: Christmas is a time for celebration. Keeping stock levels steady and assessing any finance needs in advance will help lingerie retailers enjoy this festive time.



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