Working capital management is critical to a firm’s liquidity and operational efficiency. However, for businesses subject to cyclical demand patterns—such as agriculture, retail, tourism, and construction—standard working capital models are insufficient. This paper explores the concept of , defined as the fluctuating portion of a firm’s current assets and liabilities that varies systematically with predictable, time-bound changes in business activity. We differentiate SWC from permanent working capital, analyze its financing principles (particularly the hedging approach), examine industry-specific applications, and discuss the risks of mismanagement. The paper concludes with strategic recommendations for optimizing SWC through forecasting, flexible credit lines, and supply chain coordination.
Many businesses experience fluctuations in sales and production levels throughout the year. For instance, retailers often experience a surge in sales during the holiday season, while farmers may see a spike in production during harvest seasons. To meet this increased demand, businesses need to invest in more inventory, hire additional staff, and maintain higher levels of accounts receivable and payable. what is seasonal working capital
One of the most interesting risks associated with seasonal working capital is a phenomenon called . Working capital management is critical to a firm’s