Challenges of working capital management in Finnish SMEs

Abstract

Working capital management is vital to a company’s survival and performance and is especially important for small- and medium sized enterprises (SME). The purpose of this study was to understand what SMEs in Finland struggle with when it comes to their working capital management as well as find out if the Covid-19 pandemic has impacted the working capital management practices in Finnish SMEs. As SMEs are such a crucial part of the Finnish economy, understanding the challenges that has risen from the Covid-19-crisis can help prepare for any future crises that heavily impacts the economy. A quantitative study was done to map how SMEs manage their capital management and the survey results show that most of SMEs responding to the survey do not have major working capital issues despite not following up all areas of their working capital systematically. The biggest common issue seemed to be time for proper follow-up and as well as inventory management. The Covid-19 pandemic has impacted SMEs way of managing their working capital and it has increased the awareness of the importance of working capital management in more than one-third of the SMEs who participated in the survey.