General information about working capital techniques and how they are used to manage a company's short-term financial resources

Working capital refers to the capital a business has available for its daily operations. It is the difference between a company's current assets and its current liabilities. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and other debts that are due within one year.

There are several techniques that companies can use to manage their working capital, including:

Managing accounts receivable: 

This involves setting credit policies, monitoring payment patterns, and taking steps to speed up the collection of outstanding payments.

Managing inventory: 

This involves controlling the level of inventory, ensuring that it is being used efficiently, and minimizing waste.

Managing accounts payable: 

This involves negotiating favorable payment terms with suppliers, making timely payments, and taking advantage of early payment discounts when possible.

Managing cash flow: 

This involves forecasting future cash needs and making sure that there are sufficient funds available to meet those needs.

By effectively managing their working capital, companies can improve their financial performance and increase their ability to meet short-term obligations.

Ahsan Tariq
Preston university
Department of management science