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    Role of Working Capital Management in Business Success

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    ANUPAM KAPTI
    Working capital management is crucial for business success and long-term sustainability. It helps optimize the use of short-term assets and liabilities, freeing up capital that can be reinvested for growth. Effective working capital management increases profitability, ensures sufficient cash flow, and strengthens a company's viability by helping it meet short-term financial obligations. Key aspects of working capital like inventory, accounts receivable, accounts payable, and accruals require ongoing monitoring and management by financial professionals to maximize efficiency, maintain good supplier relationships, and avoid under-utilization of resources.

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    Role of Working Capital Management in Business Success

    Uploaded by

    ANUPAM KAPTI
    78 views2 pages
    Working capital management is crucial for business success and long-term sustainability. It helps optimize the use of short-term assets and liabilities, freeing up capital that can be reinvested for growth. Effective working capital management increases profitability, ensures sufficient cash flow, and strengthens a company's viability by helping it meet short-term financial obligations. Key aspects of working capital like inventory, accounts receivable, accounts payable, and accruals require ongoing monitoring and management by financial professionals to maximize efficiency, maintain good supplier relationships, and avoid under-utilization of resources.

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    Role of working capital management in business success

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    Working capital management is crucial for business success and long-term sustainability. It helps optimize the use of short-term assets and liabilities, freeing up capital that can be reinvested for growth. Effective working capital management increases profitability, ensures sufficient cash flow, and strengthens a company's viability by helping it meet short-term financial obligations. Key aspects of working capital like inventory, accounts receivable, accounts payable, and accruals require ongoing monitoring and management by financial professionals to maximize efficiency, maintain good supplier relationships, and avoid under-utilization of resources.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    78 views2 pages

    Role of Working Capital Management in Business Success

    Uploaded by

    ANUPAM KAPTI
    Working capital management is crucial for business success and long-term sustainability. It helps optimize the use of short-term assets and liabilities, freeing up capital that can be reinvested for growth. Effective working capital management increases profitability, ensures sufficient cash flow, and strengthens a company's viability by helping it meet short-term financial obligations. Key aspects of working capital like inventory, accounts receivable, accounts payable, and accruals require ongoing monitoring and management by financial professionals to maximize efficiency, maintain good supplier relationships, and avoid under-utilization of resources.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    NEWS TV RESEARCH EVENTS RESOURCES COMMUNITY BLOGS CAREERS

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    Blog article
    Role of working capital Retired Member
    See all stories »
    management in business Member since Location
    News in your
    inbox success 19 Mar 2009
    Blog posts
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    For Finextra's free
    10 February 2018 2 2 2 Comments
    daily newsletter,
    5,756
    breaking news
    and ashes and Working capital management has an important role to play in the
    weekly job board. success of any business enterprise. Over 75% of companies that
    are running at loss or struggling nancially would be pro table

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    Up
    and liquid if were more disposed to the knowledge and practice
    of e cient working capital management. The working capital More from Retired
    management system helps in ensuring that tied down capital that
    could otherwise be put to productive uses are released. Many
    Blog post
    nance professionals and business experts often ignore the
    importance of this management. They usually do not go the extra Fintech

    Channels mile in striving for optimum utilization of resources tied to Open banking: Innovating identity to
    working capital just because they only look at the work involved fight against fraud
    Financial in carrying out proper working capital management exercise.
    Inclusion 24 May 1 3 1
    Working capital management is an effective management
    technique tool that has the potential of guaranteeing long-term
    Blog post
    success. Indices such as: ‘cash management’, ‘accounts
    Group receivable management’, ‘accounts payable management’, Under the Hood of Screen Scraping
    ‘marketable securities management’, and ‘accruals management’,
    Financial 22 May 3 5 2
    are crucial responsibilities of nancial managers that require
    Inclusion
    constant supervision from the CFO (Chief Financial O cer).
    Blog post
    TEN IMPORTANCE/ BENEFITS AND USES OF WORKING CAPITAL
    Digital Banking Trends
    MANAGEMENT
    Embracing the Future of Smarter
     1. Expansion of investment portfolio Customer Communications
    Funds released through sound working capital management
    Management Today
    practices act as a cheap source of nance that can be used for 17 May 0 2 2
    expansion of existing projects or for investment in new spheres
    of investment.
    Blog post
    2. Increased pro tability Fintech

     Increasing pro tability is one of the main objectives of engaging Battle for correspondent bank
    in working capital management. One of the ways of increasing accounts: 4 scenarios
    pro tability through adequate working capital management is in
    13 May 0 1 4
    saving of nancial cost that would have otherwise been incurred
    but for managing short-term assets and liabilities.

    3. Ensure the availability of su cient resources


    This post is from a series of posts in
    Through stock management which is a component of working the group:
    capital management, a business is able to ensure that resources
    are su cient at all times. Optimal stock level, for instance, is Financial Inclusion
    determined using some models outside the scope of this article.
    The nancial services industry has
    4. Solidi es the going concern status of a company much to contribute to the UN and
    World Bank goal of full nancial
    In business, it is very common to nd a pro table company goes inclusion by 2020. This group will
    out of business if it fails to meet up with the short-term nancial focus on industry contributions, ideas,
    needs of the business. Businesses need to satisfy its short term barriers and enablers.
    Welcome to Finextra. We use
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    Policy.Improves overall e ciency of a company See all

    The overall operational excellence of a company would be greatly


    improved by an effective working capital management system.
    NEWSWhereTVthis system is in place,
    RESEARCH nancesRESOURCES
    EVENTS are managed inCOMMUNITY
    such a BLOGS CAREERS
    way that it poses no hindrance or obstacle to any aspect of the
    entity. SIGN UP
     6.     Helps a company avoid overtrading

    Overtrading is one of the fastest ways to business failure. One


    main characteristic of overtrading is mismatching assets and
    nances. The business goes beyond set nancial goals and
    objectives, and in the long run, it meets with ruin. Some trends
    signaling overtrading will include uncontrolled, out of proportion
    business expansion.

     7.     Maintain good relation with suppliers and other creditors

    Where a business engages in the proper management of its


    working capital and other nancial indices, Trade creditors and
    other non-trade creditors are poised to continue doing business
    with it. Their knowledge of the existence of this system goes a
    long way to boost their con dence in the business and their
    dealings.

     8.  Avoid underutilization of resources:

    While we condemn overtrading and tag it as a negative impact on


    the functionality of the business, we must also reiterate that
    under trading can cost a business a fortune in an unearned pro t.
    Through proper management of working capital, a company can
    ensure that there are no idle resources.

    9.  Provides better insight into the true nancial state of a


    company:

    Through working capitals ratios, analysts and nancial experts


    can gain a better understanding of a business. The working
    capital management affords the business the opportunity of
    taking a closer look at all of its nancial indices.

     10.  Allocation of resources:

    Management of working capital is essential in the allocation of


    resources. It assists the business management incorrectly
    allocating the right resources to appropriate quarters. Applying
    the ratios revealed upon the utilization of the management
    system, as well as all other necessary analysis, areas with
    surplus resources and the shortage of resources are identi ed
    and followed swiftly with appropriate even distribution of
    resources to all.

    Managing working capital is synonymous with e ciently


    managing other resources in the business. Other nancial indices
    are considered such as the ratios of turnover, the ration of the
    collection, the ration of key performance. All of these can only be
    effectively achieved by a standard, e cient and state of the art
    management of working capital.

    21933

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