The Christmas period sees more rogue traders than any other time of the year

The run up to the festive season inevitably brings about increased opportunities to do business and during December it is common to see a rise in the number of temporary traders.

SMEs operating in the wholesale, retail and food and drink sectors in particular may be tempted to purchase stock from Christmas traders, who often offer favourable trading terms and low prices.

However, it can be difficult to track down the seasonal businesses if there is an issue or complaint with the purchased goods.

The following tips from Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance, are designed to help firms worried about trading over this period:

1. Beware of counterfeit and out-of-date goods If you decide to purchase stock from a seasonal trader which you are then planning to sell on, it is vital to check for guarantees of authenticity and best before dates. You will be accountable if the wares are illegal. If in doubt, do not buy. 

2. Keep meticulous records of purchases When buying products it is essential you ensure you obtain proof of purchase and contact details in case the business moves on.

3. Credit check your customers Lloyds TSB Commercial Finance offers customers its First Check services to obtain credit information on potential and existing clients. This will help identify risk of cash flow issues.

4. Boost cash flow In the run-up to Christmas, many businesses process an increased number of orders, but due to extended payment terms may not be paid for these until January. In order to capitalise on seasonal opportunities it may be worth considering an invoice finance facility to boost cash flow.

5. Take out a credit insurance policy To ensure your sales ledger is protected, it makes good business sense to utilise a credit insurance policy, such as Lloyds TSB Commercial Finance’s debtor insurance. The policy safeguards up to 90 per cent of bad debt suffered and ensures companies are in a strong position to grow in 2011.