Seven different approaches to working capital management

 1. Cash Conversion Cycle Management:

This approach focuses on minimizing the amount of time that inventory, accounts receivable, and accounts payable are outstanding, thereby reducing the amount of working capital required. 

2. Supply Chain Management: 

This approach involves managing relationships with suppliers and customers to optimize inventory levels, terms, and payment cycles. 

3. Just-in-Time Inventory Management: 

This approach focuses on having just the right amount of inventory on hand at any given time to meet customer needs without wasting resources. 

4. Capital Structure Optimization: 

This approach focuses on the optimal mix of debt and equity to fund operations and maximize returns. 

5. Working Capital Financing: 

This approach involves using debt, equity, and other financial instruments to fund working capital needs. 

6. Credit Management: 

This approach involves managing customer credit terms and payment cycles to maximize cash flow. 

7. Risk Management: 

This approach involves mitigating operational and financial risks associated with working capital Management.

Ahsan Tariq
Department of Management Science 
Preston University