This website uses cookies to establish a secure connection and personalize your experience. By continuing you consent to the use of cookies. For more information and instructions on how to opt out of cookies, visit the Online Privacy and Interest-Based Advertising Statement. If you choose to opt out this message will continue to appear.

Online Policy Statement

9 min read

Managing seasonal demand: Top cash management strategies and solutions for your business

If your business experiences fluctuations in sales due to season, buying cycles or holidays, find out how to maximize your cash flow and sales at the peaks and minimize losses in the valleys.

One of the greatest challenges for any business is the sudden fluctuation in sales and cash flow due to seasonal cycles. While feasts and famines both have their challenges (either the business can’t cope with demand, or there’s not enough work to pay the bills) business owners face this ever-inescapable reality: seasonality is a drain on capital if you don’t plan for it. This article takes you through strategies and tactics for both cash management and sales and marketing to help you cope.


Don't have the time to read the whole article? Here are five action items to take away right now: 

  1. Audit the seasonality your business experiences and develop contingency plans to manage the impact.
  2. Review cash cycles in previous years and make revenue projections. Meet with your financial partner to discuss parts of the year where you might require support.
  3. Invest in cash flow software or a bookkeeper.
  4. Build a calendar of events so you always know what’s going on in your city; have a plan for quickly building sales campaigns for one-off opportunities.
  5. Form partnerships with other businesses that either have different or no seasonality cycles.


Cash management strategies and solutions

Know your cash flow cycle – and invest in managing it

The foundation of navigating seasonal ebbs and flows is having a clear understanding of your business’s cash flow cycle. Accurate revenue projections don’t just give you confidence in the sustainability of your business, they also help your financial partner find the right solution to ensure there is enough money on hand to manage any part of the calendar. Diligent cash management can be difficult for a small business owner, so consider investing in either high quality cash flow software or hiring a bookkeeper. The combination of being confident and honest about the financial support your business needs, and when, helps to ensure financial solutions can be customized to your needs.


Line of credit

When your cash flow cycle is well understood, smart conversations can take place about the types of financial products and solutions that can help your business. A line of credit (LOC) is best used as financing to fund working capital assets. Because businesses will often use them to take on more work while waiting for payment from previous jobs, they’re a common way your financial partner can support the ongoing operation of your business. Short-term increases – often called ‘bulges’ – can help your business meet demand through busy periods.


Margined lines of credit

To margin a line of credit is essentially to secure the credit you receive to an asset you have. The advantage is in their size – the amount available to you can be much larger because they’re tied to a piece of equipment, property, your receivables or your inventory. Because you’ve done the work to provide a view of your cash flow to your banker – like balance sheet, accounts receivable, revenue projections and other seasonality information - a significant loan, based on both your assets and an expected level of business activity, can be managed effectively.

Here’s an example: Let's say a small manufacturing company has $500,000 worth of equipment, $300,000 accounts receivable, inventory, and other assets in their business. Their banker offers a line of credit where they can borrow up to 50% of the value of their inventory and equipment and 75% on the value of their receivables. They use those assets as collateral. In this case, the manufacturer could take out a line of credit up to $475,000 (50% of $500,000 and 75% of $300,000).


Peace of mind through forward margining

Margined lines of credit can be effective, but they may not be enough for your busiest time of year. A good financial partner will move quickly to provide a bulge but nothing is guaranteed, and let’s face it: no business owner wants to make an emergency call to their banker in the height of a busy market. It’s why forward-margined lines of credit are a great way to bring peace of mind to your business. In a forward-margined line of credit, a total sum is made available, but the amount available at any one time will be based on the previous month's financial statements. As you approach a busy season, the amount will scale up, in step with your previous months’ revenue, to meet your demand.

Here’s an example: A bike shop knows that by April and May, customers will be coming through their doors thinking about new wheels and gear. The shop will need inventory in place by February and March, though, to get everything ready for the sales floor. The shop has a $2 million forward-margined line of credit. Through the slower fall and mid-winter, only $1 million is available to them. In the spring, and because the shop is providing monthly revenue reports to their bank, their facility climbs to $1.5 million, and eventually $2 million to meet the height of bike season.


The case for not drawing on – or even using - a line of credit

Lines of credit are an important financial tool that every seasonal business should consider. But if you’ve expertly managed your cash flow and have the funds to operate, you might be better off preserving your credit for opportunities.

If your business runs expensive equipment, financing may also be the financial solution you’re looking for. You may even consider a longer amortization to keep your payments down, thereby preserving important liquidity.


Interest-only skip payments

Seasonality can mean that expensive assets sit idle for large parts of the year. If that asset - say a piece of heavy machinery - is financed, skip payments can be arranged to reduce your overall monthly payment. It’s a solution that helps ensure the business has enough cash flow to pay for overhead costs and operations during slow periods.

Take the example of a concrete pumping business, who recently financed a brand-new concrete pump. The payments are amortized over a lengthy term, but for four winter months each year, the pump doesn’t generate income. The owner comes to CWB with this problem, and as a financial partner that wants to support the long-term success of the business, the company’s relationship manager installs skip-payments when slow season arrives.


Cash cycle: mind the gap between collecting and paying

Stay on top of the gap between collecting and paying. How quickly you are receiving funds vs when you are paying vendors. In some cases, you don’t want to be paying early if you’re not making cash fast enough to fulfill immediate needs.

It can be helpful to look at the trade terms you have with your customers or vendors, including getting candid about whether those terms are currently being followed, or if there’s room to negotiate them so they better align with your cash flow needs.


Sales and marketing

Creating a sales strategy around your industry characteristics is one part of navigating seasonality. You may have to consider for national holidays, school vacations, weather and even unplanned cultural and societal events. Any of these can bring an unexpected drop or boom to your business.

To help reduce the impact of seasonality, consider the following sales and marketing strategies.


Flatten the demand curve

A jagged sales cycle may require you to encourage your customer to make purchases at different times of the year. Think about:

  • Changing your price. If demand is high, you could increase prices with the assumption demand will drop just enough to still be busy. And if demand is low, offer discounts or incentives to encourage purchase.
  • Allowing customers to pre-purchase in exchange for a discount, free product, service or other high value but low-cost item.
  • Setting up a yearly payment plan or subscription model that encourages customers to pay monthly.
  • Increasing advertising during slower periods to increase sales opportunities.



Diversifying your products and services during quiet periods, can provide resiliency to fluctuating demand. Ways to diversify include:

  • Launching new products or services outside your usual sales high.
  • Partnering with other businesses that are complementary. In one potential arrangement, you could sell their products when you’re not busy, and they would sell yours in return. You can also sub-contract and supply your products and services to larger businesses.
  • Importing or exporting products that you can sell off-season.
  • Establishing new sales channels like e-commerce so you can sell to other regions that continue to demand your product or service.

Keep your ear to the ground

Look for opportunities to take advantage of events and circumstances, like a sports or cultural event in your area. Consider extending your business hours to accommodate the time-sensitive demand. If the event is just outside your area, consider opening pop-up stores or partnering with a business in that region.

Develop contingency of supply

Do you have the inventory to meet a spike in demand? Have a back up plan in place so you can access surplus product or services (e.g., temporary employees) when an unexpected rush comes. Have a plan for the case when demand suddenly drops and you need to offload your products and services – especially if your products are perishable.

Manage the off season

Think about what you can do to efficiently scale down for the expected drop in sales and when customers may still need support. This could mean closing parts of the business (think ski resorts shuttering for the summer, or an accounting firm closing during Christmas) and using the time to prepare for the next season. It’s not unusual for some businesses to have two separate parts to their business that open and close with the seasons.

Manage the on season

If you do find a sudden increase in demand, remember to expand or actively manage customer service activities. The last thing you want is unhappy customers waiting for delivery or learning that you’ve run out of product. Identify and access surplus product or services to satisfy temporary high demand if needed. To help do this:

  • Arrange back-up suppliers in case your existing providers run short. Buy in volume before any expected increase, so you don’t run out. If you can buy inventory on consignment (only pay for what you sell), even better.
  • Use inventory management software that links to sales so staff don’t order too much of the wrong item. Be prepared to offload any spare product or materials at the end of the season.
  • Labour supply is critical. Plan to add people when busy season approaches, and reduce when it ends. Make further plans to juggle staff hours during holiday seasons when there will be many requests for time off.
  • Investigate contracting out parts of your operation to other businesses if demand bottoms out.


Almost every business has some form of seasonal demand. Sales and marketing is a crucial aspect that can either derail your operation or keep it moving forward.

How you manage and deal with the issues that could derail your business is what counts and take care to save and protect any cash surplus during the good times to rely on when times are tight.