3 Ways to Cure Your Business of a Holiday Sales Hangover

By December 19, 2017Blog

It’s the end of the year and business is booming!

According to payment service provider WePay, the holidays give a generous boost to Q4 sales. In fact, SMBs generate roughly 20 percent of their revenue between Thanksgiving and New Year’s Eve, but what happens when the dust settles on their balance sheet? Holiday shoppers might bring a dramatic sales increase, but they can also complicate business cash flow. Consequently, business owners that fail to reconcile their balance sheet by the end of the year enter Q1 at a disadvantage.

WePay recently released a survey that identifies several challenges SMBs face as a result of holiday sales. The company polled 500 small business owners and operators across the US and revealed three common holiday pain points: late-payments, chargebacks and fraud. At the end of 2016, 21 percent of SMBs said they struggled with late B2B payments. 59 percent of those firms said they had to follow up with late-payments at least twice before they were paid. Late payments are particularly common in the B2B market because vendors offer net terms. Many vendors extend net terms to their business customers as a grace period, to accommodate their business cycles. Nevertheless, net terms can attract less than ideal customers and even fraudsters who resolve to buy now and pay never. The result is a slew of outstanding holiday receivables that can follow your business into the new year.

Chargebacks and fraud cause a similar strain on finances by undermining a business’ sales performance. According to the survey, 26 percent of SMBs lost money due to chargebacks or fraud in the last year. After the holidays, it’s common for dissatisfied customers to demand exchanges and refunds. However, too many chargebacks can blind side a business during the home stretch and fraud can devastate them. If the owner of the business didn’t account for a potential loss in revenue earlier in the year, they might find themselves suddenly strapped for cash. At the same time, the business owner may be too busy keeping up with holiday demand to resolve the issue. Let’s face it, time and resources are scarce at the end of the year and there’s no quick fix for chargebacks and fraud. This article offers three tips that will alleviate your business’ holiday sales hangover.

1. Accelerate Collections

Time is of the essence, so take a more aggressive approach with collections by holding yourself and your customers accountable within a shorter period of time. You don’t have to break terms with your customers or even cut out the niceties; simply follow-up on payments in shorter increments. There is a lot vying for your customers’ attention and cluttering their inbox this time of year, so the goal is to keep your business top of mind until you get paid.

2. Fix Bottlenecks

Look for bottlenecks in your collections process and fix them. A quick fix is better than no fix at all. For example, if your customers with outstanding balances haven’t been responsive to email reminders, switch contact methods and give them a call. A call adds a nice personal touch and gives you the opportunity to wish customers a happy holidays when you remind them to pay. Chances are your customers are also trying to start the new year on the right foot and will be willing to work with you. You can find a more permanent solution to the bottleneck after the holiday rush.

3. File Fast

The moment you are notified of a chargeback or a potential fraud case take IMMEDIATE action. You want to wash your hands of this mess before it starts to delay 2018 business plans. At the very least, your business should file all necessary documents with the bank before year’s end. Provide more context around the transaction than the customer, to prove your case. If you can’t resolve all of the cases by the end of Q4, get the ball rolling so they’re resolved by the beginning of Q1.

Depending on the outcome, your holiday sales hangover could result in a loss of time, resources, and revenue. Don’t let a few refunds and delinquencies jeopardize your 2018 business plan. Cushion your 2018 budget with a short term loan or credit line to offset the loss. Behalf can qualify your business for extra buying power in minutes. Use your Behalf account to buy the big ticket items your business needs to grow and extend payment on a customized schedule. Find out if you qualify for Behalf and boost your 2018 budget.

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