As a small, seasonal retailer how can I better manage my cash flow?

I decided to share this article in follow up to my earlier article on end of season clearance

The reason why most retailers are keen to clear old stock it to get the cash back into the business. We all know that cash flow is critical…

The same client who asked the question about clearance also asked this question:

“I own and run a very seasonal business and have to invest in stock well in advance of sales to merchandise my store. Have you got any advice how I can better manage cash flow when buying in advance of the demand?”

The answer is that tt is very difficult for a seasonal business to manage cash flow in the pre-season buying period. There are a few strategies you can adopt to help.

1. Place a commitment order and then manage stock flow and therefore cash flow by call-off

Agree a total quantity with the supplier for the season, as a commitment, but only place the orders you need when you need them – so in the first instance just enough to cover your merchandise display quantities and a little extra to cover for early sales (the sales you would make between merchandising the product and the next order quantity arriving). You may still be committed to the whole season quantity, meaning you have to purchase the stock at some point, but at least the phasing is less loaded to the start of the season and the cash is spread a little more throughout the on-sale period

2. Agree an approximate requirement with a supplier and then order based on forecast demand

Better still, agree a flexible commitment with the supplier – such that you can cancel out of a proportion of the estimated requirement, or indeed increase on your pre-season estimates, to enable you to reduce any risk of high end of season stocks if a line doesn’t perform as well as you’d expect or conversely if a line does very well you can keep it stocked throughout the season and ensure you don’t lose sales.

3. Secure a proportion of your range on sale or return agreements

Possibly the best approach is to find some suppliers who will offer a sale or return – completely reducing your risk – it is highly unlikely you’ll be able to get a sale or return agreement across the majority of your assortment, but anything you can get it on of course is well worth having!

4. Negotiate extended payment terms with the supplier, or, put forward a good business plan to the bank

One alternative approach, if none of the above work for you, is to agree extended payment terms with suppliers. It is often difficult to put such terms in place for a smaller retailer. Even if you can the supplier may increase the overall buying price they quote you, after all, the suppliers have to cash flow their businesses too, but the benefit to your cash flow may make this worthwhile. If suppliers won’t support with extended payment terms you can always seek support from the banks… In spite of what you may hear in the press, the banks are still lending where a business has a good enough case.

Your financial Supply Chain!

One of the most important aspects of trading for a small retailer is to manage the fine balance between up front stock commitment and when the sales come through. The major multiples often manage this process on spreadsheets – so Excel is as good a place as any to start!

Give me a call if you need any help!

If you have not come across the process of WSSI (weekly sales, stock and intake planning) or OTB management (open to buy) give me a shout – I can either take you through that off line, 1-2-1, or, if enough people seem to want some more details then I can always do a follow up article on WSSI & OTB as important planning and control processes for a small retailer’s financial supply chain!


About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email
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