Cash Flow Guide for Retail Businesses in Australia

The retail cash flow cycle

Retail businesses live and die by stock levels. You need to buy inventory before you can sell it, and the timing rarely lines up. Buy too little and you miss sales. Buy too much and cash is tied up in unsold stock. Add seasonal demand swings and you've got a cash flow rollercoaster.

Key cash flow pressures for retailers

• Stock purchasing: Suppliers want payment in 14-30 days. Your stock sits on shelves for weeks or months before selling.
• Seasonal buying: Christmas stock ordered in September-October. Summer stock ordered in winter. You're spending months before the revenue arrives.
• January dead zone: Consumers are spent after Christmas. Revenue drops 30-50% but rent, wages, and insurance don't.
• Growth stock: Opening a second location or expanding your range means doubling your stock investment before doubling your revenue.

How an overdraft works for retail

A business overdraft lets you buy stock when the price is right or the timing demands it, then repay as sales come in. It's the difference between stocking up for Christmas in October (funded by the overdraft) versus scrambling in November with whatever cash is left.

How much do retailers need?

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