With tax season coming to and end, many Americans will receive their refunds in the next couple months, which generally leads to a period of heightened sales for retailers.
However, that might not be the case this year, as many consumers said they plan on spending their tax money on travel instead.
As a result, retailers could continue to see sales slump in the coming months, which might lead to lagging cash flows. In situations such as these, financing from a bank can be difficult to obtain, but inventory financing may still be an option.
According to a new survey from Travel Leaders Group, nearly 50 percent of Americans said they plan to use some or all of their tax refund for vacation travel. Additionally, more than 94 percent said that they already have, or plan to take at least one leisure trip in 2013.
Estimates from the Internal Revenue Service said the average tax refund in 2013 will be around $3,000.
"Americans are clearly bullish on travel once again with over 94 percent of our survey participants planning to travel for pleasure this year and a very significant number intending to use their tax refund to make their travel dreams a reality – that is clearly good news for our nation's economy," said Barry Liben, CEO of Travel Leaders Group.
With more consumers planning to spend money on vacation travel, retailers might not see the jump in business that usually occurs after tax season. Should this cause cash flow to lag, these businesses could struggle to operate at normal levels.
Small- to medium-sized retailers experiencing difficulties due to slow sales could benefit from inventory financing, which allows them to use current product as collateral to obtain a revolving line of credit.