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How to optimize cash flow management in the fashion industry?

Fashion, and the retail sector in general, face strategic cash management challenges. In this article, we'll look at what these challenges are, the best practices for dealing with them, and how Fygr can help you optimize your fashion company's cash management.
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Fashion industry: key points to remember about cash management

Cash management is a key strategic issue for fashion companies, whose business model is based on very short collection cycles, high initial investments, and significant exposure to inventory risk. Cash is required ahead of sales, sometimes several months before marketing, which makes financial forecasting essential:
Rapid collection cycles with repeated investments in design, production, and marketing before any revenue is generated
High risk of overstocking and depreciation due to rapid obsolescence of unsold collections
Globalized value chain (multi-currency flows, varying payment terms, international logistics costs)
High seasonality with sales concentrated in a few key periods of the year
Fygr enables fashion brands to structure their cash flow management, secure financing for collections, and accurately track profitability by product line, despite the volatility of the sector.

The specific cash flow challenges for companies in the fashion industry

Why is cash management particularly difficult for companies in the fashion industry? We have identified three major issues.
Ultra-fast collection cycles and massive investments
Extreme inventory volatility and risk of depreciation
Globalized value chains and complex financial flows

Ultra-fast collection cycles and massive investments

The fashion industry is characterized by extremely short collection cycles, typically two to four times a year.

Each new collection requires significant investment in design, production, and marketing, even before any revenue is generated. Brands must finance the creation, manufacture, and promotion of new lines several months before they can be marketed, creating constant pressure on cash flow.

This significant financial anticipation, combined with rapid turnover, exposes companies to significant cash flow risks.

Extreme inventory volatility and risk of depreciation

The fashion industry faces a major inventory management challenge, characterized by extremely rapid obsolescence.

Changing trends and strong seasonality mean that collections quickly lose their value, sometimes overnight. Unsold inventory not only represents a significant financial commitment, but also becomes an asset that depreciates at a dizzying rate.

Companies must constantly balance between building up sufficient inventory to meet demand and the risk of overstocking, which could compromise their financial stability.

Globalized value chains and complex financial flows

The fashion industry is characterized by a highly globalized value chain, involving sourcing, production, and sales in different countries and currencies. This internationalization generates considerable financial complexity: exchange rate fluctuations, variable payment terms depending on geographical area, international logistics costs, and a multitude of tax and trade regulations.

Each transaction becomes a cash management challenge, requiring constant visibility and anticipation to maintain the company's financial balance.
BEST PRACTICES

How to effectively manage cash flow for a company in the fashion industry

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Anticipate collection cycles and their financial impact

Cash management in the fashion industry requires an in-depth understanding of production cycles and their financial implications. Each new collection represents a massive investment involving significant design, production and marketing costs, well before the first sale. It is crucial to develop a financing strategy that takes into account these time lags between initial investment and returns on investment. This forward-looking approach makes it possible to precisely calibrate cash requirements, anticipating periods of financial tension linked to collection launches, while maintaining sufficient flexibility to adapt to market trends and variations in demand.

Master dynamic inventory management

The fashion industry is characterized by a high risk of overstocking and rapid depreciation of collections. Optimal inventory management therefore becomes a major strategic challenge for preserving the company's financial health. This approach implies developing great agility in supply management, by closely synchronizing production with consumption trends and sales forecasts. This involves setting up precise monitoring mechanisms to enable rapid adjustment of production volumes, negotiating flexible terms with suppliers, and implementing intelligent destocking strategies to minimize financial losses.

Manage international financial flows with precision

The fashion industry is characterized by a profoundly globalized value chain, involving complex, multi-currency financial flows. Controlling these flows is crucial to maintaining a stable and predictable cash flow. This requires constant vigilance with regard to exchange rate variations, a detailed understanding of international tax regulations, and the ability to negotiate settlement conditions adapted to each market. The aim is to build a financial strategy that minimizes foreign exchange risks, optimizes payment times and guarantees full traceability of international transactions, while maintaining sufficient flexibility to seize growth opportunities.
CHOOSE FYGR

Why use Fygr for a fashion company?

Fygr is the perfect cash management solution for the fashion industry. In fact, many of our customers are already using Fygr. In the rest of this article, we'll look at how Fygr can help your fashion business manage its cash flow.
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GOOD REASON #1

Automatic bank synchronization

Centralize and optimize your financial flows across your collections and international markets
Precise revenue tracking by collection and product line
Automatic tracking of international cash receipts (multi-currency)
Connection to all your bank accounts and your various entities (brands)
GOOD REASON #2

Dynamic cash flow forecasts

Anticipate the profitability of your collections and secure your investments
Precise simulation of financial impact for each new collection
Projected seasonal financing requirements
Scenarios to measure the impact of different actions
GOOD REASON #3

Comparative analysis forecast/actual

Manage your financial strategy with precision and responsiveness
Instant comparison of actual vs. forecast performance
Immediate strategic adjustment based on the gap between forecasts and actuals
Precise comparative analysis by product line and category

They chose Fygr

Here's what some of our customers have to say after choosing Fygr to visualize their financial data:
After trying out several other cash management software programs, I chose Fygr because it is easy to use, functional, and reasonably priced. If you need help, the teams respond quickly and are always ready to listen.
Julien Dubertrand
Financial Advisor @ Rivalis
Cash flow is often what makes the difference between a company that weather the storm... and one that suffers.
At Altyma Management, we support executives on a daily basis to anticipate, manage, and secure their cash flow with tailored tools such as Fygr and a truly strategic vision.
Because having a good cash flow plan means, above all, being able to make decisions with peace of mind.
Thomas Desnot
Expert outsourced CFO, Founder @ Altyma Management
Many thanks to Julie at FYGR for her patience during our discussions about how to use the tool! We are receiving excellent support, thank you!
Sochanda Pich
CEO @ MyArtistPlace
FAQ

Everything you need to know about cash management for companies in the fashion industry

Answers to the questions you ask us most often.
How to choose cash management software for a fashion company?
To choose the right cash management software, first identify the specifics of your business model: fast fashion, luxury or ready-to-wear. Look for a solution capable of managing complex collections, short production cycles and seasonal variations. Choose a tool that offers international bank synchronization, multi-currency management and the ability to generate multiple scenarios based on market assumptions. Fygr can be a solution adapted to the financial particularities of the fashion industry.
What are the advantages of cash management software over Excel for a fashion brand?
Cash management software offers crucial automation for the fashion industry, significantly reducing the risk of errors when managing collections. Unlike Excel, it enables you to monitor profitability by line in real time, anticipate seasonal financing requirements and quickly detect financial anomalies. Backups are automatic and secure, and synchronization with international flows is instantaneous, a major advantage for brands with globalized value chains.
How do you make reliable cash flow forecasts in the fashion industry?
For reliable forecasts, collect accurate historical data for at least two complete collection cycles. Analyze your flows, taking into account extreme industry seasonality, production lead times and variations in raw material costs. Integrate creation costs, R&D investments and potential overstocking risks. Use differentiated scenarios for each type of collection, and regularly adjust your forecasts in line with consumer trends.
How long does it take to set up cash management software for a fashion brand?
Set-up times vary according to the complexity of your business model: a luxury brand with complex international circuits will take longer than a fast-fashion brand. This can range from a few days to several weeks, depending on the number of bank accounts, the diversity of collections and the integrations required. Fygr adapts to the variety of business models in the fashion industry.
How much does cash management software cost for a fashion company?
Rates vary significantly according to the size and complexity of your brand. At Fygr, prices start at €59 per entity and bank account, with options tailored to the specificities of the fashion sector. The cost must be weighed against the potential savings: optimized inventory, reduced financial risk and improved profitability per collection.
Who are Fygr's competitors in the fashion industry and who should you choose?
Fygr's main competitor is Agicap. But their positioning is different. Fygr's core target is SMBs who want a solution with excellent value for money, whereas Agicap is known for having a solution that is much more complex to learn and more expensive, much more suited to large enterprises.
How do I know if my fashion brand needs cash management software?
Your company needs cash management software if you're having trouble forecasting the profitability of your collections, if manual management of your flows is becoming time-consuming, or if you lack visibility over your inventories and their valuations. This is particularly relevant if your annual sales exceed €1 million, or if you manage several collection lines.