Time Finance has urged small and medium-sized enterprises (SMEs) to prepare for slower customer payments over the Christmas period, warning that delays could place additional pressure on cash flow during one of the busiest periods of the year.
Businesses often face increased spending on stock, staffing and extended operations in the run-up to Christmas, while waiting for customers to pay outstanding invoices. This can leave otherwise profitable companies short of working capital when they need it most.
Ed Rimmer, chief executive of Time Finance, said September and October are key months for businesses to review their finances and prepare for the December and January cash flow pressures.
The seasonal slowdown can create a mismatch between money going out and payments coming in. Businesses still need to meet payroll, pay suppliers and settle tax obligations, even when customers take longer to pay their invoices.
The Government’s proposed Commercial Payments Bill is intended to cap payment terms for large businesses at 60 days. However, Time Finance argues that this period could still leave smaller suppliers waiting too long to receive money owed to them.
Late payment remains a challenge for SMEs, and the Christmas period can intensify the impact as customers and suppliers manage their own seasonal workloads. Delays can restrict a company’s ability to purchase stock, maintain operations and meet its financial commitments.
Time Finance has highlighted invoice finance as one option for businesses seeking to manage these pressures. The funding method allows companies to access a proportion of the value tied up in outstanding invoices, providing working capital while customers complete their usual payment cycles.
The company recommends that SMEs review their payment history, identify customers likely to delay settlement and assess which invoices may remain unpaid over the festive period. Businesses should also test their cash flow against scenarios in which a major customer pays in January rather than December.
Preparing early can give businesses more time to consider funding options and reduce the risk of unexpected shortfalls. Time Finance also says larger companies should recognise the effect their payment practices have on smaller suppliers, as extending payment periods can transfer working capital pressures down the supply chain.
Time Finance plc (LON:TIME) is an AIM-listed business specialising in the provision or arrangement of funding solutions to UK businesses seeking to access the finance they need to realise their growth plans. Time Finance can fund businesses or arrange funding with their trusted partners through Asset Finance, Invoice Finance, Business Loans, Vehicle Finance or Asset Based Lending.
