A strong sales season is what every franchisee hopes to achieve. But busy doesn’t always mean flush, and the weeks around a rush can put a real squeeze on cash flow.
It’s important to remember: timing is everything. Stock, extra rostered hours and equipment costs usually arrive before the revenue does. Rent, franchise fees and loan repayments carry on regardless, including through the quieter weeks that follow.
This makes October a good time to plan for the summer silly season, because there’s still room to make choices.
“The cash flow environment has changed,” says David Edwards from Banjo Loans. “Payday Super now requires super contributions to leave the business alongside each payroll cycle, rather than being managed quarterly. There’s also the RBA’s recent removal of card payment surcharges, which means some franchisees must now absorb costs that were previously passed through to customers.
“Planning ahead is even more critical with these extra headwinds.”
Here’s some seasonal cash flow advice Edwards says franchises should bear in mind:
- Know what your summer looks like
The pressure points differ from franchise to franchise, but some of the scenarios you might need to account for look like this:
- Seasonal demand: Food, beverage, retail, fitness and tourism-linked franchises often need to buy stock and add staff well before the crowds arrive.
- Shutdowns: Trades, education and B2B service franchises may lose trading days over the festive break, while costs continue.
- Slower payments: If your customers are businesses, December invoices can drift into February. Your suppliers and staff still need paying on time.
“The key is knowing where the pressure will land before it arrives,” explains Edwards. “Then you have time to prepare rather than react.”
- Count every cost, not just the obvious ones
When you map out the season, include the costs that are easy to underestimate and could subsequently derail your cash flow:
- Stock: Bigger orders, often paid up front or on short terms.
- Wages and super: Extra shifts, casuals, public holiday penalty rates and same day super contributions.
- Franchise fees: Royalties and marketing contributions that move with sales, or fixed fees that don’t.
- Rent: Due in full, whatever the week’s trade.
- Transaction costs: If your business processes a high volume of card payments, factor in merchant fees without the offset of card surcharges.
- Equipment maintenance: Servicing and repairs before peak, rather than a breakdown during it.
- Tax: GST, BAS and PAYG obligations that build with higher sales and fall due on their own schedule.
“Not every cost is predictable,” clarifies Edwards. “But it’s good to control the controllables to reduce the risk of a nasty surprise.”
- Forecast to February, not just to Christmas
“Many franchisees forecast to the end of the peak and stop,” says Edwards. “However, the tighter stretch can come after it, when sales ease, receivables are still outstanding and the tax bill from a big quarter lands.”
Franchises can overcome this impediment by building a week-by-week cash flow forecast through to February. Expected money in gets mapped against the money going out. Look for weeks where the balance dips. Be conservative on sales and build in some buffer on payment timing.
“A forecast that includes the quiet weeks is the one that protects you,” Edwards admits. “Not every business knows where to start when it comes to mapping cash flow, but we’ve created a cash flow eGuide also which also has a great forecasting tool that can help you navigate through.”
- Spot funding needs early
“If your cash flow forecast shows a gap, it’s far better to know now,” says Edwards.
Talking about funding before you commit to spending gives you more choices, more time to compare them and a stronger position when you apply. Waiting until the account is already stretched tends to narrow the options and raise the stress.
“There are two options worth knowing about,” he points out. “Working capital loans can bridge the gap between paying for stock, wages and running costs and receiving. Asset finance can spread the cost of new or replacement equipment, so a large purchase doesn’t drain the cash you need day to day.”
- Plan now, trade with confidence
Being a new franchisee is no excuse for making mistakes through the summer silly season. Your franchisor knows what to expect and can help you plan now and trade with confidence based on the experience of your peers.
As Edwards concludes, “Cash flow is the oxygen of any business, franchise or otherwise. Keep it in tip-top shape and you can breathe easy.”
If your cash flow forecast shows a gap, or you’re considering new equipment ahead of peak season, check out our specialised franchise funding options here or contact [email protected]
