A seasonal business does not have a cash problem in February. It has a planning problem in July. Seasonal business cash flow planning without borrowing is arithmetic from last year's books: add up every month where cash out beat cash in, and that sum is what the off season costs. Set that amount aside during the peak, in a separate account, before owner draws and new trucks. Run a monthly forecast that shows the low point and the date it lands. A line of credit is the backup, not the plan. If you own several companies, do the sum for each, because one peak often pays for another's trough.
Who has a season, and what it looks like in the bank
Landscaping runs April to November across most of the country and the phones stop when the ground freezes. HVAC has two peaks, the first heat wave and the first cold snap, with troughs in spring and fall. Retail is back-loaded: the National Retail Federation says November and December have averaged about 19% of the year's retail sales over the last five years. A hotel's season depends on the property. Construction follows the weather and the bid cycle.
The pattern is common. The Federal Reserve Banks' 2025 report on employer firms found 51% of small businesses had faced uneven cash flows in the prior year, and the 2026 report found 56% of firms that applied for financing did so to meet operating expenses rather than to expand. Those are seasonal loans, seen in aggregate.
The JPMorgan Chase Institute followed 45,000 firms founded in 2013 through their first four years using bank account data and published the result in 2019. About 30% had irregular cash flows in year one. Of those, 46% had exited by the end of year four, against 29% of firms with a regular pattern, and among the irregular firms the exit rate fell with the cash buffer, from 55% for those holding under a week of cash to 35% for those holding more than eight weeks. These are new firms, and the study measures irregularity rather than seasonality as such. The buffer still did the work.
The two numbers behind seasonal business cash flow planning
Trough cost is the sum of every month in the last twelve where cash going out exceeded cash coming in. It is what the off season costs you, in dollars, before any borrowing.
Peak set-aside is the trough cost divided by the number of months in your peak. It is the amount that has to leave the operating account each peak month for the off season to be covered.
Both numbers come from the bank register, or from the QuickBooks Statement of Cash Flows run one month at a time. They do not come from the P&L, which is where most owners look first. On accrual books, the October invoice for the fall cleanup is October revenue; the cash lands in December, or in January when the customer gets around to it. A year that shows a profit in every month on the P&L can hold a fourteen-week hole in the bank. The gap between the two reports is the subject of why net income does not match the bank balance; for the seasonal plan, use the cash report and set the profit one aside.
Two years of monthly history is the minimum for a trough number you can trust, and three is better, because one wet May distorts a single year. Truist's guidance for seasonal businesses asks for three to five years of sales history. Most owners on QuickBooks Online have it.
A worked example: a landscaping company in Columbus
On the first Monday in April, the owner of a landscaping company in Columbus, Ohio, opens last year's bank register. The company does $2.4 million of revenue with 34 staff in season and 9 in winter. Cash out exceeded cash in by $41,300 in December, $52,800 in January, $48,100 in February and $22,600 in March. The other eight months were positive.
| Month | Cash out over cash in | Running total |
|---|---|---|
| December | $41,300 | $41,300 |
| January | $52,800 | $94,100 |
| February | $48,100 | $142,200 |
| March | $22,600 | $164,800 |
Trough cost is $164,800. Spread across the eight peak months, April to November, the peak set-aside is $20,600 a month, the transfer that leaves the operating account on the first of each of those months and lands in an account nobody spends from.
The owner's draw is the second lever. She takes $18,000 a month. Cutting that to $9,000 for the four slow months keeps $36,000 in the business, which drops the trough cost to $128,800 and the set-aside to $16,100 a month. The draw is not borrowed back in March; it is simply smaller for four months, which the household can plan for in July. How the draw is structured is in owner draw, salary or distribution.
Where the set-aside goes in the order of draws
The mechanics matter more than the sum, because the sum is easy and the transfer is the thing that does not happen. The set-aside goes to a separate account, swept on a fixed day of the month, funded before the owner's draw, before equipment, before the second crew truck and before the second location. Whatever comes first in that order wins.
Most seasonal-business advice includes "diversify into an off-season service" as a way to smooth cash. We would put that last, and often skip it, because a new service line usually burns cash for two seasons before it pays, in exactly the months you are short. Snow removal works for a landscaper when the trucks and crews already exist and the contracts are signed in September. A new line that needs its own equipment is a second business started at the worst time of year.
This reserve is not the general cushion every business needs; how much cash reserve a business should have covers that, and a seasonal business needs both. The set-aside is money with a date on it, spent on purpose between December and March, and near zero when the peak starts again. A TD Bank survey of owners in 2025 found only 19% had six or more months of operating costs saved; the set-aside does not ask for that, because it is sized to your own trough.
The forecast, and the three levers that move the low point
A monthly cash forecast is a twelve-month table of expected receipts and payments, starting from today's balance, that shows the lowest balance of the year and the month it lands. The cash flow forecast that takes an hour is the build. The weekly version is the 13-week cash flow forecast, and for a seasonal business it matters most from November to March, because the low point is a week, usually the one where payroll and the equipment payment land together.
Three levers move the low point. The first is collections in the shoulder months: every fall-cleanup invoice collected in November instead of January moves cash from the trough to the peak, and deposits on spring contracts signed in February do the same from the other side. The second is the timing of fixed costs. Insurance renewals, software subscriptions and equipment payments can often be moved into the peak, and BDC, the Canadian business development bank, lists prepaying the mortgage after the peak instead of before it among the five common mistakes in a seasonal business. The third lever is payroll. Seasonal layoffs with rehire dates, crews cross-trained across summer and winter work, and a snow contract that keeps three people on all match payroll to the work rather than the calendar.
Navigator reads each company's QuickBooks Online file read-only and shows cash across all of them every morning with days of cover, so the reserve account and the operating account are read together. On the Pro plan at $499 a month, the 13-week and rolling 12-month forecast marks the low week and its date and lets you test a smaller draw or a line draw before March rather than during it. Plans are on the pricing page.
What the forecast cannot do is protect you from a bad peak. A wet May, a mild summer for an HVAC company, a slow December for a store: the set-aside assumes the peak arrives, and when it does not the plan needs a backup.
The line of credit is the backup
A seasonal line of credit is a revolving loan sized to the trough, drawn in the slow months and paid to zero in the peak. Banks that lend them look for the rest period, the stretch of weeks each year when the balance sits at zero, because a line that never rests is financing a loss, not a season.
The pattern a bank wants is simple. Drawn in March, at zero by July, untouched until the next winter. The Federal Reserve Bank of Kansas City's lending survey for the fourth quarter of 2025 put the median rate on new lines of credit at urban banks at 6.65% fixed and 7.09% variable, and about 91% of line usage was at variable rates. At 7.09%, a $100,000 line drawn for four months costs roughly $2,360 in interest, which is cheap insurance against a bad peak and an expensive way to fund a predictable one every year. Line of credit or term loan covers when each fits.
When one company's summer pays for another's winter
Plenty of owners already have the summer company and the winter company: a landscaping LLC that peaks April to November and a snow-and-holiday-lighting LLC that peaks November to March, with the same trucks. Every December the summer company sends $60,000 to the winter company, and every May some of it comes back. In most of the files we see, neither set of books records it as a loan, and after three years nobody can say what one company owes the other.
The fix is a documented intercompany loan. One transfer, a due-from balance in the lender's file and a matching due-to balance in the borrower's, with a date by which it nets to zero, June for this pair. Intercompany transactions explained for owners has the entries. Do the trough calculation for each company on its own before you net them, because the thing to watch is the strong company's reserve quietly becoming the weak company's operating capital. If the winter company borrows $60,000 every December and pays back $40,000 every May, it is not seasonal. It is losing $20,000 a year, and neither QuickBooks file on its own will say so.
Questions owners ask
How do seasonal businesses manage cash flow in the off season?
The ones that do it without borrowing size the off season from last year's bank activity, set that amount aside during the peak in a separate account, and shift what they can (collections, renewals, equipment payments, payroll) toward the busy months. The ones that borrow every year usually never worked out the number, so the peak spent itself before winter arrived.
How much should a seasonal business save during peak season?
The sum of last year's cash-negative months, divided by the number of peak months. A landscaper whose bank fell by $164,800 across December to March, with an eight-month peak, needs $20,600 a month set aside from April. Use two years of history at least, and take the numbers from the bank register or the cash flow statement, not the P&L.
Should a seasonal business get a line of credit?
Yes, as the backup for a bad peak, not as the plan for a normal winter. A seasonal line is drawn in the slow months and paid to zero in the busy ones, and the bank checks for that rest period. The Kansas City Fed's Q4 2025 survey put median new-line rates at 6.65% fixed and 7.09% variable at urban banks. A line that never rests is financing a loss.
How do I forecast cash flow for a seasonal business?
Start from today's balance and lay out expected receipts and payments by month for twelve months, using last year's pattern for timing. Mark the lowest balance and the month it lands. From November to March switch to a weekly view, because the low point is a week, usually the one where payroll and an equipment payment land together. Update it monthly in the peak and weekly in the trough.
What if one of my companies is busy when the other is slow?
That is the best position a seasonal owner can be in, if the books show it. Compute the trough for each company on its own, then document the transfer between them as an intercompany loan with a due-from and due-to balance and a date it nets to zero. Watch for the strong company's reserve becoming the weak one's operating capital: a loan that comes back smaller every spring is a loss, not a season.
Related
If the weekly view is the part you have never built, the 13-week cash flow forecast is where the low week shows up. For the cushion that sits underneath the seasonal set-aside, read how much cash reserve a business should have. And if the draw is the lever you are thinking about pulling, owner draw, salary or distribution explains what each one does to the books and to your taxes.
If you want to see this year's trough building across every company before it arrives, the trial connects in about fifteen minutes and needs no card: navigatorhq.ai.
You're on the list.
The next post goes to . While you wait, the free Accounting Health Check scores your own books.
Published . Last updated . Reviewed by a CFO on the Navigator team.