The peak of summertime is almost upon us and, for many Welsh companies, this can mean preparing for a change in business activity.

Warm weather over Easter drove a surge in demand and footfall for firms across the country. According to the Welsh Government’s most recent Tourism Business Barometer, more than five in six (86 per cent) businesses either maintained or increased their visitor levels over the long weekend.

Whether hot, sunny days drive an increase in footfall or holiday absences cause delays in payment during the summer months, both can seriously affect cashflow and increase a business’s working capital requirements - the amount of money it needs to cover-to-day costs.

This can create particular difficulties for SMEs, many of which can’t afford to let slowdowns in payments, or upswings in demand that they are ill-prepared for affect them this summer.

Fortunately, there are a few simple things that firms can do to protect themselves from such seasonal financial pressures.

What can businesses do to prepare for the summer months?

Firms sometimes take a little longer to pay their bills during summer. This can be for several reasons, including invoices waiting to be approved by individuals who are on holiday and, for hospitality and retail businesses in particular, increased operational pressure caused by a spike in footfall.

If the time taken between delivery of goods or services and being paid is extended, it can put a real strain on finances. But it’s not just payment delays that cause pressure, a seasonal business that benefits from extra demand during the summer months may need to have more cash available to take full advantage of an uptick in orders.

By more tightly managing working capital, businesses can shorten the cycle of initial outlay and payment from customers. Doing so can free up funds that can then be used to invest in everything from inventory or staff, to new trading partners - ultimately funding growth.

The first step is to work closely with a trusted adviser. To help businesses, Lloyds Bank has created a working capital management tool that allows our relationship managers to analyse cashflow cycles with their clients, benchmark them against their peers and identify financial opportunities and challenges.

Secondly, firms should ensure they are on top of all income and expenditure. This sounds obvious, but not being aware of the money coming in and going out of a business makes cashflow forecasting very difficult, and makes it even tougher to know when to chase delayed payment.

Preparation, of course, is key. Businesses should speak to their customers before any summer peak in demand or slowdown in payments. While it’s a simple task, some firms can be reluctant to do so in case they put pressure on valuable customer relationships. However, contacting clients before the agreed due date to ensure they have received an invoice and to check that everything is in order can iron out issues and avoid potential delays in payment.

Unfortunately, sometimes a degree of slowdown in payments is inevitable. To make sure that a business is equipped to deal with these circumstances, having flexible financing in place can help when a payment is unavoidably delayed.

One such example of this is invoice financing. It allows a business to access up to 90 per cent of the value of an invoice within 24 hours of it being issued, giving businesses the assurance that outstanding revenue is still available when third-party issues arise.

Finally, taking steps to improve working capital ahead of a busy summer period can help firms manage cashflow as they bring in new staff and expand their business.

In these circumstances, it is essential that the management team’s working capital management structure is thorough and engages with every department, especially non-financial areas of the business such as sales or customer facing staff. Changes made need to be rolled out across the business in this way, and all departments need to be on board with their goals and aligned with the overarching aim of improving working capital.

While these measures to improve working capital may seem time-consuming, being prepared for summer and all it means for your business is invaluable. The uptick in demand Welsh businesses saw over the Easter weekend shows it’s never too early to get started.