# Don’t take your eye off working capital management this summer Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2016-06-01 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: How SMEs Can Manage Working Capital During Summer Season Meta Description: Discover how Hitachi Capital Invoice Finance can help SMEs bridge the funding gap during the summer season with flexible financial support. URL: https://financedigest.com/dont-take-your-eye-off-working-capital-management-this-summerhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/dsc-2872-970-1736844731694-compressed.jpg) Small and medium-sized businesses must not take their eye off the ball when it comes to managing working capital through the summer season, when resources often become stretched, according to Hitachi Capital Invoice Finance. Client data1 sourced by Hitachi Capital Invoice Finance has revealed that SMEs are more likely to seek additional funding during the month of July than at most other times of the year. In fact, demand for extra funding only exceeds the levels seen during the summer peak in one other month of the year – October. John Atkinson, managing director at Hitachi Capital Invoice Finance,  says: “The summer [holiday season](https://www.financedigest.com/hasbro-ramps-up-toy-supply-for-holiday-season-to-beat-shipping-delays.html "Hasbro ramps up toy supply for holiday season to beat shipping delays") is a time when many SMEs are feeling the strain due to a depleted workforce and this can have a detrimental effect on productivity and business performance. Trading activity might slow down and invoice payments might take longer than usual to materialise, particularly if key people are away on holiday. To help bridge the funding gap, our data shows that [SMEs](https://www.financedigest.com/forecast-based-financing-for-smes.html "Forecast-based financing for SMEs") are more likely to seek cash flow finance.” SMEs need to have access to cash throughout the year to [pay for inventory and other operational overheads such as salary costs](https://www.financedigest.com/factbox-strikes-protests-in-europe-over-cost-of-living-and-pay-2.html "Factbox-Strikes, protests in Europe over cost of living and pay") and supplier invoices. If income levels dips during the summer months, this can directly [impact on working capital and potentially lead](https://www.financedigest.com/bicycle-chain-market-size-and-forecast-2020-2030-with-post-impact-of-covid-19-by-top-leading-players-sram-llc-renold-plc-taya-chain-co-ltd-kmc-group-shimano-inc-tien.html "Bicycle Chain Market Size And Forecast (2020-2030) | With Post Impact Of Covid-19 By Top Leading Players- SRAM LLC., Renold PLC., Taya Chain Co., Ltd., KMC Group, Shimano Inc., Tien") to cash-flow difficulties later in the year. John Atkinson adds: “If SMEs have failed to keep a close eye on working capital management throughout the year, they may be tempted to dip into cash reserves that have been set aside to pay their tax return when it becomes [due at the end of January each year](https://www.financedigest.com/child-resistant-single-dose-pouches-market-one-the-most-booming-industry-in-upcoming-years-due-to-global-demand-by-2031.html "Child Resistant Single Dose Pouches Market | One the Most Booming Industry in Upcoming Years Due to Global Demand by 2031"). This is never a wise thing to do and is simply storing up [cash flow problems for the future](https://www.financedigest.com/cash-me-if-you-can-the-future-of-contactless-commerce.html "Cash me if you can: The future of contactless commerce"). “To avoid this, businesses may [need](https://www.financedigest.com/global-crises-that-need-the-finance-industry.html "Global Crises That Need The Finance Industry") to take preventative action by seeking a flexible form of financial support, such as invoice finance, ahead of the start of the summer season.” There are other [things that businesses can do to alleviate pressure](https://www.financedigest.com/iomt-internet-of-medical-things-to-accelerate-the-intracranial-pressure-monitors-market.html "IoMT (Internet of Medical Things) to accelerate the Intracranial Pressure Monitors Market") on cash flow during the summer season. Improved [business forecasting, for example, could enable the business to plan ahead for any dip in trading activity](https://www.financedigest.com/euro-zone-business-activity-contracted-again-in-august-pmi.html "Euro zone business activity contracted again in August -PMI") and it may also be wise to delay non-essential expenditure during periods when cash flow is more likely to come under pressure. If necessary, seasonal incentives could also be offered to encourage debtors to make prompt payments. John Atkinson concludes: “By [planning ahead carefully and taking a creative approach to working capital](https://www.financedigest.com/ecb-unicredit-clash-over-capital-plans-russia-presence-ft-says.html "ECB, UniCredit clash over capital plans, Russia presence, FT says") management, there is much that SMEs can do to avoid getting into cash flow difficulties over the summer season. As well as taking this action, [SMEs should consider putting](https://www.financedigest.com/putting-smes-first-the-alternative-to-the-overdraft.html "Putting SMEs first: the alternative to the overdraft") in place a finance partner who understands how cash flow problems arise and how to deal with them.” 1 The data [sourced by Hitachi Capital Invoice Finance indicates the total number of clients seeking additional funding](https://www.financedigest.com/nissan-pushes-partner-renault-to-sell-down-stake-may-raise-funds-source.html "Nissan pushes partner Renault to sell down stake, may raise funds -source") on a month-by-month basis during 2014 and 2015. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---