Working Capital Variation: How to Anticipate and Optimise It
Introduction
Your working capital requirement (WCR) — or BFR in French — isn’t static. It changes based on your sales cycle, purchasing patterns and customer behaviour.
Poorly anticipated, a rise in working capital needs can quickly create a cash flow crunch. But with the right tools and financing options, you can stay ahead of the curve and avoid stress.
In this guide, we explain how to anticipate working capital variation, what causes it, and how to finance it without compromising your business.
What is working capital variation?
Working capital variation is the difference in your WCR over two periods — typically from one month or quarter to another.
Example:
• January WCR: £50,000
• February WCR: £80,000
➡️ Variation: +£30,000
Your business needed £30,000 more in February to operate. This means more cash tied up in operations.
Why does working capital vary?
Three main components affect your WCR:
1. Stock – Increase in purchases or inventory build-up
2. Accounts receivable – Customers paying later
3. Accounts payable – You’re paying suppliers faster
This can happen during seasonal peaks, sales growth, or when customer payment terms extend without supplier terms adjusting.
Why this variation is risky
• Cash flow gets strained
• You rely on your overdraft (which can be costly)
• Payments to suppliers or staff get delayed
• You miss out on new contracts due to lack of liquidity
How to anticipate working capital changes
✔️ Track your WCR monthly
Use a cash flow forecast that includes receivables, payables and inventory.
✔️ Plan for seasonal cycles
If you know Q4 means more stock and staff, plan funding in advance.
✔️ Optimise client terms
• Ask for deposits
• Incentivise early payment
• Automate invoice follow-ups
✔️ Negotiate with suppliers
• Ask for longer payment terms
• Bundle purchases for better terms
How to finance working capital variations
✅ Short-term loan
Fast to set up, no guarantee required, up to £100,000 over 1–6 months.
✅ Bullet repayment loan
Repay in one go when a major invoice clears or cash comes in.
✅ Stock financing
Ideal for businesses needing to increase inventory before peak periods.
✅ Confidential invoice factoring
Convert unpaid invoices into instant liquidity — without alerting your clients.
✅ FinHub in action:
• Decision in 24h
• 100% online
• No personal guarantee
• Funding within 48–72h
📈 Real-world example: Growth-driven variation
A growing fashion e-commerce brand doubles its Q4 turnover. It must increase inventory and marketing spend 2 months before receiving customer payments.
➡️ Working capital variation: +£60,000
➡️ FinHub loan: £60,000 over 4 months
➡️ Result: Smooth operations, strong Q4, no cash stress
Common mistakes to avoid
❌ 1. Not monitoring WCR monthly
Yearly reviews are too late — cash management must be continuous.
❌ 2. Confusing profit with cash
You can be profitable and still run out of money if your WCR rises sharply.
❌ 3. Reacting too late
If you wait until you’re in the red, you reduce your financing options.
FAQ – Working capital variation
💬 Is a negative WCR variation good?
Yes — it usually means better cash flow (e.g. faster payments, less stock). But check why it changed.
💬 Can I forecast my working capital needs?
Absolutely. With a solid cash flow model and past data, you can anticipate increases months in advance.
💬 Can small businesses finance WCR?
Yes. FinHub offers solutions for SMEs with 12+ months’ trading and recurring activity.
💬 How long are FinHub loans?
From 1 to 6 months, with fixed or bullet repayment depending on your needs.
Conclusion
Variation in working capital is normal — but dangerous if ignored. By understanding what drives it, tracking it monthly, and securing fast, flexible funding when needed, you keep your cash flow under control.
FinHub helps UK SMEs finance their working capital without collateral or paperwork, so they can focus on growth.
✅ Need help bridging a working capital gap? Try FinHub – instant estimate, no obligation.
