Increased financial troubles lead to fall in retail spending

With more Americans facing financial uncertainty, retail spending has taken a hit, which could negatively impact small- to-medium sized businesses.

During periods of declining sales, retailers can see cash flows fall below normal levels, which can make operating difficult, as financing from a bank can be hard to obtain. However, inventory financing is available to qualifying businesses to help them through these troubling times.

According to the Consumer Reports Index, the declining outlook by consumers has taken a toll on retail spending, as the Index's past 30-day retail measure dropped for the third straight month in March.

This was evident in the 0.4 percent decline in retail sales during March, according to the U.S. Commerce Department.

However, the Index's next 30-day retail measure increased slightly as consumers plan to spend on major appliances, small appliances, and yard and garden equipment to prepare for summer.

This wasn't enough to boost consumers' outlook for the economy though, as more were faced with financial troubles in March. The Index's trouble tracker rose for the first time in three months.

"At best, consumers feel the economy is treading water," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center. "They are still holding back spending, largely due to the uncertainty they feel."

With that uncertainty, retailers could take a hit in the next couple months, which could create lagging cash flows. In situations such as these, small- to-medium sized businesses could struggle to operate at normal levels.

Retailers who do begin to struggle might want to consider inventory financing. This type of asset-based lending allows companies to use current inventory as collateral to obtain a revolving line of credit, which can be used to help out during these lulls.