Define receivable management, payable management or working capital management important?

Working capital, as the name itself implies, helps a business to run successfully in the low periods of the business. The importance of working capital management is that the ensuing cash flow will help the business to run smoothly and perform all the tasks properly even when the sales are slow. There are times when no matter what, expenses like paying the rent of the premises or making the payments on the electricity bill or paying the salary of the employees have to be done even though your payment from the client is taking some time to get in.

This is where the working capital comes in as it helps tide over these important low periods. Then, when the sales are up again, and the business makes it usual profit, the loan can be paid off. There is no trouble in maintaining the inventory and there is also no financial worry. Many banks and NBFCs have very low working capital loan rates which will help an SME or MSME to tide over the occasional shortage of funds which is quite common in the initial days of business.