Florist Shop’s Cash Flow Gap

An article by Wayne Jordan    No Comments

Everyone loves to get flowers.  Flowers can say “Thank You”, “Get Well”, and “I Love You”.  Flowers make special occasions sparkle; what’s a wedding without flowers?  It’s those special occasions that keep a florist profitable.  In between the special occasions though, business is slow, and many florists have trouble paying their bills.

 Five Good Months, Seven Slow Months

Florist shops are busiest around Valentine’s Day, Mother’s Day, Christmas, and during the month of June, when many weddings take place.  In between the holidays, business at florist shops is slow but steady: occasional funerals, birthdays, and miscellaneous gifts.  The money made in the good months must be carefully rationed in order to make it through March, April, July, August, September, October and November.

Inventory Drain on Cash

Florists must have fresh inventory, and many nurseries want to be paid on delivery, since the product is perishable.  Even when business is slow, there must be fresh inventory on the shelf; no one will buy wilted flowers.  In addition to flowers, a florist needs to buy plants, containers, boxes, paper, and other supplies. 

The Cash Flow Gap

Surviving in the floral business is not only about how much money is made, but when it is made and when it is spent.  Florists must carefully watch their inventory and cash flow so that they will have enough cash to pay the rent, utilities, and payroll during the slow months.  Having access to a line of credit is desirable, but a line of credit or a bank loan is difficult to get and generally requires collateral and a personal guarantee.  Repaying a bank loan requires regular fixed payments, which are difficult to make because business is slow most of the year.

Merchant Cash Advance Solution

Florist shops generally do a lot of credit card transactions.  When shops with strong credit card sales find themselves short on cash, they can get a cash advance on future credit card receipts with a merchant cash advance.  A cash advance is often a good cash flow solution for a florist because:

• Repayment is made from credit card receipts, so the payment will go up and down as sales go up and down
• There is no fixed repayment term
• No collateral is needed

 Florists who have at least $2500/month in credit card sales, are current on their property lease, have been in business at least four months, and have a FICO score of at least 500 generally qualify for a merchant cash advance.

Bridge the Holiday Gap

Florists who can access their future credit card receipts through a merchant cash advance will find that they have less to worry about in the slow months between the holidays.