Working capital management is the process of managing a company's short-term assets and liabilities to ensure it has sufficient liquidity to meet its day- to-day operational expenses and short-term financial obligations. It aims to optimize cash flow and maximize operational efficiency by effectively managing components such as cash, accounts receivable, inventory, and accounts payable

. Specifically, working capital management involves:

• Liquidity management: Ensuring enough cash is available to pay bills and handle unexpected costs.
• Inventory management: Controlling inventory levels to avoid overstocking or stockouts, which impacts cash flow and profitability.
• Accounts receivable and payable management: Managing the timing of money owed by customers and money owed to suppliers to shorten the cash conversion cycle, thus improving liquidity.
• Short-term financing management: Using options like lines of credit or short-term loans to cover temporary cash flow gaps

The overall goal is to balance having enough working capital to support smooth business operations without holding excessive idle funds that could be better invested elsewhere. Effective working capital management supports operational continuity, solvency, profitability, and a positive business reputation, while reducing the need for external borrowing and enabling sustainable growth

. In summary, working capital management manages the relationship and flow between current assets (cash, receivables, inventory) and current liabilities (payables, short-term debt) to keep the business financially healthy and operationally efficient