Rising Inventory Costs Push Small Business Owners to Cover Holiday Expenses With Savings

Flute research shows owners expect to pay more for holiday inventory and pay for it sooner,
while more of the sales that cover those costs wait in settlement

TEMPE, Ariz., Nov. 10, 2026 /PRNewswire/ -- Flute, the payments platform for growing businesses, released "Who's Paying for the Holiday Season?", which found that 58% of small business owners will use personal savings or credit to cover holiday costs this year.

Holiday inventory and shipping bills come due weeks before holiday sales bring in revenue, and owners expect that gap to cost more this year. Specifically, 40% of the owners Flute surveyed say they'll need more cash up front than they did last holiday season. Respondents run retail, jewelry, professional services, and restaurant or hospitality businesses.

"Holiday inventory gets paid for in October, and the sales that pay it back don't come in until December," said Derek Dean, CEO of Flute. "Most owners are going to cover that stretch with their own savings or a personal card. Then their busiest weekend hits, and that money sits in a pending deposit while the next restock order comes due. Payment providers already see every sale a merchant makes. We should be using that history to fund the season so owners can keep their own money at home."

Owners are ordering more, and ordering sooner
Inventory drives most of the added cost. Half of owners cite higher inventory costs, and 36% need to order earlier than usual. Shipping and fulfillment costs (32%), uncertain demand (31%), and tariffs or import costs (29%) add to the pressure. Inventory was also the top reason owners needed cash over the past year, according to Flute's report, "The Cost of Waiting To Get Paid."

With nearly a third of owners bracing for unpredictable demand, many are committing cash before they know how much of their stock will sell.

Owners plan to cover the gap themselves
Only 42% of owners say they could fully cover holiday inventory, staffing, or seasonal costs today without personal savings or credit cards. Another 40% could cover part of it, and 18% couldn't cover any of it.

Retailers, who make up two-thirds of respondents who answered holiday questions, have the least room. Only 37% can fully cover holiday costs without using personal money. Smaller businesses face an even tighter season. Among businesses with less than $250,000 in revenue, only 31% can fully cover holiday costs on their own, compared with 54% of larger businesses. Moreover, 27% of smaller businesses can't cover any of those costs without personal funds, 2.7 times the rate for larger businesses.

If cash gets tight, 33% of owners would dip into personal savings first. When it comes to cutting costs, 28% would scale back marketing and promotions, while 18% would reduce inventory. Owners who cut either one risk losing the holiday sales they're counting on to recover what they spent.

More holiday sales will sit in settlement
Owners expect more customers to pay by card this season. In fact, 69% expect credit and debit cards to take a larger share of holiday sales, and 34% expect the same of digital wallets, which means a higher portion of sales will sit in the settlement process before reaching their accounts. Flute's October report found that 58% of owners wait two or more days for bank settlement, so revenue from a busy weekend often sits in pending deposits when vendor bills come due.

The owners who feel that they wait the longest are also the least prepared. Among owners who say faster access to their own money would meaningfully change how they run their business, only 36% can fully cover holiday costs without personal money, compared with 58% of other owners.

To learn more about funding the holiday season with Flute, visit flute.com. Visit this link to access the full report.

Methodology
Flute surveyed 209 U.S. small business owners from August to September 2026. All respondents passed an attention check. Holiday questions were sent to 185 owners across retail, professional services, jewelry, restaurants, and hospitality. Figures are rounded to the nearest percent.

About Flute
Flute is the payments platform for growing businesses. Backed by Corsair Capital, Flute gives business owners the financial tools to run their operations efficiently, without the headaches or the price tag. Learn more at flute.com.

Media Contact
Emylee Eyler
PANBlast for Flute
[email protected]

SOURCE Flute