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Guide To Managing Cash Flow During Slow Periods For SMBs

Half of all SMBs fail within the first three years of operation, with 40% citing poor cash flow as their reason for collapsing.

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By Luke Trickett

In a perfect world, every small business would have a healthy inflow and outflow of cash all year round. But unfortunately, for many industries, this is not the case. Several industries across Australia regularly experience fluctuations in their cash flow due to the nature of their business. While many SMBs have adapted to this cycle, other organisations, particularly start-ups, may not be so well equipped.

According to figures from the Australian Bureau of Statistics, half of all SMBs fail within the first three years of operation, with 40% citing poor cash flow as their reason for collapsing. While closing down is typically reserved as a last resort, getting ahead is essential to staying operational if your business regularly experiences poor cash flow.

This blog will list the most common industries that experience seasonal fluctuations, discuss the impact slow cash flow can have on a business, and provide suggestions on how SMBs within these industries can get back on track.

The common industries that experience periods of uncertain cash flow

Whether you’ve been in the industry for one month or one year, it won’t be long until you become familiar with patterns within your industry. It’s also one of the simplest ways to avoid your cash flow issues. We’ve listed six common industries that experience seasonal fluctuations in their cash flow and why they occur:

  • Service providers — This refers to industries that provide non-tangible results in exchange for payment, including plumbers, lawn or pool care, freelancers or designers. Demand in the service industry can change throughout the year, which can cause an abrupt change in cash flow.
  • Energy companies — Electricity is a resource used daily by millions. However, many utility companies risk limited cash flow due to late payments or customers defaulting on their bills. While these companies can demand a late payment fee or shut off a customer’s power, this does not make up for the time and resources allocated to this customer.
  • Retail — The Australian retail industry can experience poor cash flow for several reasons. Poor stock management is a significant contributor, where a business purchases too much stock upfront and cannot clear it through sales. Pricing stock too low is another concern, as the profit from these sales is insufficient to cover ongoing operating costs.
  • Foodservice — Whether you are a small cafe or a large restaurant, you may run into financial trouble from increasing competition or rising overhead costs. As food delivery services continue to rise in popularity, many foodservice SMBs have had to adapt and bring these services on board, passing on a small portion of profit in the process.
  • Wholesalers — Wholesalers who provide large quantities of items to other businesses may notice changes in their cash flow. This is not due to reduced seasonal demand but rather the payment terms set out in this industry. As a gesture of goodwill, wholesalers typically provide customers with lengthier payment dates, creating large periods of slow cash flow.
  • Manufacturers — Manufacturers run similarly to wholesalers, providing customers extended payment terms on their invoices.


How slow cash flow can impact a business

As we can see, poor cash flow affects a wide range of industries across the country and if recent figures are anything to go by, it’s not just seasonal demand impacting profitability.

Australian SMBs have experienced several financial obstacles over the last few years, from the COVID-19 pandemic to mass economic uncertainty. The Reserve Bank of Australia (RBA) recently revealed that small businesses were twice as likely to experience a decline in revenue between June 2020 and June 2021.

Let’s take a look at the impact this could have on the average Australian small business:

  • Strained relationships — While we know poor cash flow can touch all areas of your business, it can also impact your relationships with suppliers, employees or stakeholders. For instance, if you cannot pay suppliers or your employees regularly and on time, they may begin to doubt your reliability and may no longer want to work with you. Many seasonal businesses rely on word of mouth, and having disappointed suppliers or employees is not ideal.
  • Stunted growth — From hiring new staff to expanding your warehouse, these opportunities require capital and if your business has not been able to build up a decent amount of savings to progress, you may be forced to reevaluate your goals or even downsize your staff.
  • Having to consider alternative financing — If your cash flow has run dry and you have little to no savings to fall back on, your business may be forced to consider alternative finance products. Small business loans, credit cards and invoice financing have been around for years and can provide businesses with the funding they need to stay afloat . However, these products can be full of risk and excessive fees, creating a financial challenge for SMBs.
  • Shutting down — Approximately 40% of business closures are directly linked to poor cash flow. This typically occurs when a business cannot meet its required expenses or pay back debts.

Poor cash flow in business doesn’t have to mean closing your doors for good. The easiest way to stave off unsteady cash flow is prevention, and that starts with a few simple tips.


As SMBs become more experienced and better understand the cash flow patterns within their industry, the next step is to put various preventive measures into place, reducing the risk of shutting down or restructuring drastically. Depending on your business's nature, these can be slight or significant adjustments.

If your business is subjected to seasonal cash flow fluctuations, see our top five preventative strategies below:

  1. Develop a cash flow forecast — Planning ahead with a comprehensive cash flow forecast and budget is the best way to be prepared for any seasonal changes over the year. It’s always a good way to anticipate and cover larger expenses without resorting to alternative measures, such as loans or other credit financing options.
  2. Use your off-season periods to grow— Lull sales periods may be an excellent time to get serious about growth strategies, by sifting through your business's savings and current expenses and developing a growth plan. This could mean expanding your current service range, brainstorming new promotions or unveiling a new product.
  3. Consider increasing prices — Since you only have a small period during the year to generate profit, it might be wise to consider slightly increasing your prices. The key to retaining customers is brainstorming a strategy that keeps them engaged, such as a promotion or special offer if they spend a certain amount.
  4. Reduce overhead expenses — During off-peak seasons, many SMBs may reduce their overhead costs to cut down on spending. Depending on your industry, this could mean downsizing staff or limiting your product or service range.
  5. Get smarter with your digital resources — Gone are the days of ancient and time-consuming technology. From data storage to invoice management, there are not many software products left that haven't experienced an upgrade. And if you believe you could be saving time (and money) with a modern system, chances are you’re right. For instance, managing invoice payments and securing customer funds is an ongoing challenge for many SMBs. Innovative payment platforms like Marmalade seek to rid SMBs of this burden and provide simple and fast access to their money, when they want it.


Marmalade — the solution for seasonal businesses

In the past, many SMBs have had to cope with delayed payments or waste time chasing up non-paying customers to get the funds they need to keep their business running. Aside from wasting resources, it can also slow your business down. That’s why we decided to create a product that puts small businesses back in the driver’s seat.

Marmalade is a unique and practical solution to unpaid invoices. SMBs can receive early payment on the invoices they send, providing them with access to their money, precisely when they want it. Here’s a better look at how Marmalade works:

  • Sign up for a free account with Marmalade
  • Issue invoices with Marmalade Virtual Bank Account (VBA) details
  • Select invoices you would like to have paid early
  • Pay a one-time fee of between 3-5% per invoice
  • Get your money within one business day
  • Spend that money however you please

SMBs have had to cope with delayed payments or waste time chasing up non-paying customers to get the funds they need to keep their business running.

Don’t miss out

For many years, we’ve seen SMBs have to apply for unaffordable financing products, from loans to credit cards, and struggle to keep up with the repayments and other financial demands. Marmalade is unlike any other small business financing option — we do not charge interest or exorbitant fees to use our product. Instead, we charge a one-off fee each time you choose to receive early payment on an invoice.

There are no security risks, as once you upload any eligible invoice to our platform, Marmalade absorbs the credit risk from non-paying customers —, saving you the time, effort, and money previously spent securing payments from these invoices. We’ve kept the process simple and non-invasive; we don’t conduct security checks and won’t ask you to fill out extensive forms upon application.

And thanks to our seamless integration with Xero, you’ll always stay up to date with the status of your invoices, whether you’re awaiting payment or checking if they’ve been approved in our system.

Say hello to healthy cash flow all year round with Marmalade

Managing a small business can be challenging in itself. Managing a small business with unpredictable cash flow is a different ball game. From cutting back on spending to delegating responsibilities with reduced staff, it’s essential to have access to the resources that can make day-to-day tasks easier.


Marmalade is a risk-free and budget-friendly solution to keeping your business stable all year round. We are the fastest and easiest way to access your owed funds without taking on any debt.


Whether you’re looking to boost your retail cash flow or ready to make your mark in the service industry, Marmalade can help you reach your business goals. Get started and create your account today!