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Five cashflow hacks for managing seasonality in B2B

by | Oct 27, 2022 | 0 comments

To an extent, most businesses are affected by seasonality, whereas some need to entirely scale up and down operations depending on the time of the year.

Small to medium businesses know that seasonal fluctuations can seriously impact them and must build resilience into their business model. In our recent webinar, Beth James, Head of Customer Operations at Hampers with Bite, shared with Laura Athena Walker, Senior Account Executive at ezyCollect, how their team successfully manages the cashflow despite the challenges of a highly seasonal business.

Key takeaways:

  • Know your true costs throughout the year
  • Planning and forecasting are critical
  • Decisions can’t be made without information
  • Keep it simple: One source of truth with clear, concise answers.

Hampers with Bite Case Study

Case study: How a seasonal business achieved 4x revenue growth with 50% fewer resources

To understand how fluctuations affect a business’s cash flow, let’s look at how Hampers with Bite managed high-volume orders during the pandemic. 

“During the pandemic, we received a lot of orders from people giving corporate gifts for WFH staff and care packages to loved ones,” explained Beth. “This was unexpected on what is otherwise a lean period.” 

While it’s a good surprise, the situation called for efficient management of high-volume transactions. “You need to be able to scale to manage that kind of growth, but we cannot do this because of hiring challenges during the pandemic. So we opted to simplify your processes.”

Accounts receivable (AR) automation was integral to streamlining the process for Beth’s team, allowing them to collect accounts receivables efficiently and be more in control of their cashflow.

infographic of cashflow hacks to manage B2B seasonality

How can you manage the cashflow of a B2B business with high seasonality?

1. Know your cost and optimise pricing to offset the year-long cost

Understanding how much you spend on busy vs low-peak seasons can help you plan for the year ahead in terms of expenses and pricing. It would be best if you considered operational and overhead costs and what you’ll be doing year by year to budget how much money you have going out against what you expect to be going in.

Hampers with Bite rely on pricing ranges in which they base their pricing depending on the season. This pricing and other margins are optimised to offset true costs for the year.

Knowing your cost will help guide your pricing to ensure you have a consistent source of cash throughout the year to manage expenses.

2. Maintain visibility on incoming funds and outgoing expenses and forecast appropriately

Budgeting and planning rely heavily on the visibility of data and information to make well-informed decisions.

Bridging the gap between accounts receivable and accounts payable is key to proper budgeting. Offering clients payment terms can be a great way to even out your cashflow as you’re not as reliant on immediate payment. Setting payment terms gives you a form of predictability on when to expect cash that can assist with budgeting – especially on a larger scale. This information is crucial to ensure you can pay your account payables in the coming months.

“In the ezyCollect platform, the dashboards give us visibility on the percentage of debtors that will pay us on a certain period. It helps us be aware of what’s coming in,” says Beth.

The Human Side of Accounts Receivables Automation

3. Automate, automate, automate

AR automation makes a difference in managing business fluctuations and changes your business’ perspective to think more long-term. “It’s now more about growing the business rather than just dealing with the existing business,” explained Laura. Here’s how automation can help you manage seasonality in your business

  1. Save on costs
    “During high-peak seasons when you’re tripling or quadrupling the number of invoices for reconciliation and customers to contact, automation helps because there seem to be not enough hours in a day to get anything done,” said Beth.
     
    In this scenario, automation highlights the cost savings of the business when things are done efficiently versus having to do everything manually. In Hamper with Bite’s case, it replaced a week’s manual work. “We save at least $2,000 a month of reconciliation work. And when you combine that with all the chasing we have to do – it’ll be more hours and dollars saved.”

  1. Improves employee morale and productivity

    Managing seasonal staff and ensuring you retain a great and experienced permanent staff is crucial in running a seasonal business. 

    Automation makes processes simpler, and that’s important, especially during busier months when order volumes are higher. While you want to keep up with the high demand, you don’t want to burn out your employees. You want to ensure that your staff can produce quality work and that they are motivated to think more creatively.

    “If you’re downloading reports constantly and sending emails manually to hundreds of people daily, that’s tiresome and boring and can be demotivating,” says Beth.

    Automation also allows you to train staff effectively as no one’s spending too much time doing things manually and can get onboarded quickly.

  1. Strategising during off-season
    The off-season is an excellent time to plan and strategise for the coming year. The automation of AR processes assists in this as it saves everyone time from manual work and allows that time for activities that can grow the business. There’s only a limited window where a seasonal business can generate most of its income, so it’s best to get as much of your team involved in planning.

    “With automation, everyone’s got more opportunities to think creatively and focus their attention on something that can improve the business,” said Beth.

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4. Make collection easy. Fewer roadblocks mean faster timescales.

Making it easy for your customers to pay you is key to getting your collections on time, ultimately leading to a steady cash flow for your business.  

A frictionless payment experience gives your customers more opportunities to do the right thing (i.e. pay you on time). And when your B2B payment platform integrates into your AR system, this process is even more straightforward. “There are fewer excuses and fewer reasons for clients not to pay as the process is simpler: They can click a button on their invoices, leading them to an online platform to pay via credit or debit card or even in instalments,” said Beth.

Syncing AR software to your ERP streamlines the process further as this can automatically write back payments, effectively closing the loop of the order-to-cash cycle with fewer touchpoints and errors.

B2B payments in ezyCollect: Pay Now in SMS, Collect Now in Bulk, and more

5. Leverage the wait times between communications

Fluctuations in volume orders, varying transactions, and delivery lead times need proper timing of communications. Beth says, “It helps to change the wait time between all the communications depending on the aspect of the season you’re in.”

According to Beth, understanding your customers’ payment behaviours and the nature of transactions according to the season will help determine the right timing of sending email or SMS reminders to avoid overdue invoices.

“Christmas time, we put the pressure on and are persistent with our communications. We understand that during high-peak seasons, there’s a much bigger risk of people going on leave and not being able to pay, business shutdowns, or disputes (due to high delivery volumes).” 

Persitent, polite communications

While persistent communication is essential, keep in mind that remaining polite and personable with your customers goes a long way. “We are always polite when communicating, as we don’t want to damage our relationships with current customers,” Beth said.

Constant communication is important in resolving disputes early on and minimising delayed payments. It’s also a crucial aspect of maintaining healthy relationships with your customers. Set-and-forget communication workflows help you achieve this quickly. Customising messages and branding also adds up to your message’s quality.

Overdue invoices? Payment reminder templates for email and SMS

Manage business seasonality with healthy cashflow from AR automation

Seasonality affects nearly every business. Forecasting budgets and planning ensure you can successfully navigate highs and lows. Visibility on your accounts receivables is key to managing seasonality effectively.

AR automation software can help you successfully navigate seasonality, so you can focus on what you do best – growing your business. Speak with one of our AR experts today to learn about options for your business.

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