Working Capital Management Solutions

Boost your business with Enterslice’s Working Capital Management. From risk mitigation to cash flow optimization, we provide efficient solutions for sustained growth.

100000 + Happy Customer

100000 +

Happy Customer

50000 + CA & Lawyers

50000 +

CA & Lawyers

50 + Offices

50 +


Rated at 4.9 By 30000 + Customers Globally

Google Reviews

9,500+ Happy Reviews4.8/5 | 9,500+ Happy Reviews


Rated at 4.8 Rated at 4.8/5 9,500+ Happy Reviews

Unravel Working Capital Management Solutions with Enterslice

Today, businesses are overcoming the obstacles by adopting best practices for working capital management. Enterslice offers a comprehensive working capital management solution to yield significant risk mitigation, service delivery, cash flow management, and cost-cutting results. Cash flow analysis done by our experts evaluates all the procedures that run efficient working capital management. Our experts apply their experience to help a business implement efficient solutions for working capital management by making sure that all the services cater to your business's unique and individual needs. Enterslice’s collaborative approach and process expertise emphasize inlaying proficient practices that have helped several businesses to upscale cash flows, ultimately enabling growth. Enterslice is fully equipped to provide the best business solutions with end-to-end support and client satisfaction.   

Overview of Working Capital Management

Working capital management is a type of business strategy designed to ensure a business runs efficiently and without any hurdles. It involves monitoring and utilizing its current liabilities and assets to their most beneficial use. The proficiency of working capital management can be evaluated by ratio analysis. This process enables a business to maintain enough cash flow to meet the demands related to short-term operating costs as well as short-term debt compulsions. The process generally revolves around managing account payables, receivables, cash, and inventory. The process also includes tracking several proportions, which include the working capital ratio, the inventory ratio, and the collection ratio. In all, the processes lead to an improved cash flow and improved earnings quality.   

Financial Ratios Used in Working Capital Management

Current Ratio

The current ratio is computed by the division of current assets by current liabilities. This ratio is the key pointer to a business’s financial well-being because it denotes a business’s capability to meet its short-term financial compulsions. 

Inventory Ratio

For a business to operate with utmost efficiency, it has to make sure that it has a fully equipped inventory on hand to meet clients' every demand. The inventory ratio is computed by dividing the cost of commodities sold by the average balance in inventory. 

Collection Ratio

The collection ratio is the proportion that tells about a business’s efficiency in managing its accounts receivable. The ratio is computed by multiplying the day in the period the average remaining account receivable.

Significant facts of Working Capital Management


For efficient management of capital, businesses must be conscious about their receivables. This is particularly significant in the short term as the business waits for credit sales to be finished. The procedure involves supervising the business’s credit policies, observing customer payments, and upscaling collection practices.


The core demand of working capital management is tracking cash needs and cash streams. This includes administering the business's cash stream by predicting future needs, observing remaining cash, and enhancing cash inflows and outflows to ensure that the business has enough cash to meet its compulsions.   


A business’s primary concern in the process of working capital management is inventory, as it is the most sensitive aspect of capital management. A business has to visit the market and rely on customer choices to turn inventory into cash when the inventory is sold. If this process is not done on time, then there is always the risk of resources getting stuck.  


It is one of the significant aspects of the business where companies can take advantage of having a sense of control. In the rest of the aspects of working capital management, the business may not have direct control over them, but they can always control how and what amount they will pay to the vendors.

Attributes of Working Capital Cycle Calculations

Working Capital Cycle

Businesses rely on working capital cycles during the process of working capital management. The working capital cycle is the metric that measures the time a business takes to transform its current assets into cash. Working capital cycle (in days) = Receivable Cycle + Inventory Cycle – Payable Cycle. The cycle denotes the time in days from when a business pays for the inventory or raw material to when it receives payment for the final products it sells. While the process is happening, the business's resources may be bound to obligations or unresolved liquidation to cash.

Inventory Cycle

The inventory cycle denotes the time a business takes to procure inventory or raw materials, make finished products using those raw materials, and store them until they’re sold. In this stage, the business’s cash gets bound in the inventory. A business starts with cash in hand and agrees to go in separate ways from the working capital with the sense of belief that it will procure more working capital when it sells the final product with a significant profit margin.

Account Receivable Cycle

This cycle denotes the time it takes for a business to procure payment through its clients and customers after selling services and goods to them. The business's cash is bound to the accounts receivable in this process. After separating itself from the inventory, a business will be able to access the capital only after the credit sales have arrived and been received.

Account Payable Cycle

This cycle signifies the time it takes for a business to clear its dues with the vendor for the services and goods received by them. In this duration, the business’s cash is bout to the accounts payable. In this process, the business is able to hold on to its cash even after receiving goods and services from the vendor. The only significant risk involved in this cycle is that it creates significant liabilities.

Main Aim of Working Capital Management

Meeting Commitments

Working capital management must make sure that the company has an adequate amount of liquid assets to fulfil its short-term compulsions. They are able to do this often by extending vendor payment terms or by procuring early payments from the customer. A business must keep in mind they may also have to make an unexpected payment, and hence, they must take suitable measures to ensure they have sufficient cash on hand through the approach of working capital management.  

Growth of Business

It is crucial for a business to use its short-term assets effectively. It can be used for many processes like investment in research and development or expansion of a business on a global level. If the business's assets are bound in the account payables or the inventory, then the business cannot be as profitable as it could be. Hence, it is particularly significant to complete the process of working capital management in the most optimum way possible.

Optimizing Capital Performance

One of the significant purposes of working capital management is to upscale the efficiency of capital utilization. This can be done by minimizing capital costs or by maximizing capital returns. In order to maximize capital profits, a business will have to reclaim the capital that is presently bound to decrease the need for loans. To maximize capital cost, a business has to make sure that the return on investment of spare capital is more than the average cost of financing.

Productive Working Capital Management

A business’s working capital situation can improve by speeding the cash conversion cycle, but it can also lead to other consequences. One of the major risks is the reduction in inventory levels may lead to a business not being able to fulfil all the orders it may receive. As far as DPO (Days payables outstanding) are concerned, a business's account payables are also a vendor's working capital. When a business pays the dealer with a delay to improve its working capital, they're doing it at the expense of the dealer's working capital. This can substantially degrade the relations between the business and the vendors and can even lead to a cash-strapped vendor delaying the delivery. Working capital management can be called productive and effective only when the process is done without triggering any recursive consequences anywhere in the supply stream. This can be done by decreasing DSO (Days sales outstanding) by placing a more effective invoicing procedure so that the clients can receive their invoices sooner. A business can also introduce an early payment option to curb the issue of delayed payments to the supplier and get paid sooner than they would have.

Services Offered for Working Capital Management by Enterslice

Working capital management is crucial for businesses and startups, as every business has its own unique financial circumstances and resource restrictions. Here are some of the services offered by Enterslice for working capital management-

Cash Flow Management

A business may have limited access to any peripheral financing. Hence, productive cash flow management holds a significant position. Efficient working capital management safeguards that businesses have sufficient liquidity to fulfil expenses that may arise on a daily basis. This process safeguards the chances of insolvency.

Operations Proficiency

Productive working capital management permits a business to upscale its operations. For example, it aids the process of inventory management to omit overstocking or inventory running out of stock. This can be significantly costly for small-scale businesses with limited capital and storage.

Vendor Relations

Vendor relations are important to aid the process of negotiation and timely delivery. Timely payments safeguard procuring favourable credit terms, maintain good relations, discounts, etc. With the help of productive capital management, a small-scale business will also be able to negotiate better terms and trust with the vendor.

Client Relations

A business needs to procure accounts receivable in a prompt manner to establish healthy cash streams. This needs diligent observations and collection endeavours. Accounts receivable management efficiently aids the process of making strong customer relationships and safeguards timely revenue.

Reducing Financing Costs

A small-scale business generally depends on short-term loans or lines of credit to shield working capital needs. By enhancing working capital, small-scale businesses can decrease their dependency on expensive financing selections, hence minimizing interest costs.  

Investment Opportunity

Productive working capital management will allow a business to collect extra cash that can be utilized in strategies to boost its growth. The extra cash will also prove to be very beneficial when the business reaches a low point financially.

Risk Extenuation

Businesses are susceptible to economic uncertainties, fluctuations in the market, or any unprecedented event. With an adequate amount of working capital, a business will be able to overcome any financial turmoil, which will further reduce the risk of failure.

Ensure Sustainability

A small-scale business generally runs on negligible profit margins, and productive working capital management will help a business safeguard long-term sustainability and profitability. This will happen by solving and mitigating any cash flow crises that can lead a business to insolvency.

Strategic Planning

Working capital management gives a valuable understanding of planned decision-making. It aids the business in estimating domains for improvement, efficient allocation of resources, and prospects of growth or variation.

How to Increase Working Capital?

A company may want to enhance its working capital in a condition where it needs to pay for project-related costs or when it goes through a momentary drop in sales. Methodologies to bridge the breach include either an addition in current assets or a reduction in current liabilities. The options to increase a business's working capital include procuring a long-term debt, as it enhances current assets by increasing a business's available cash but does not substantially increase present liabilities. Other options are refinancing short and long-term debts, selling illiquid possessions for cash, reducing and analyzing expenses, optimizing and analyzing inventory administration to decrease overstocking, and automating accounts receivable and monitoring of payments.   

Difference between Quick and Current Ratio

While both proportions are utilized to measure a business's present performance in comparison to previous quarters, there is a significant difference between both ratios. The current ratio is the proportion that covers all the current assets. This includes all the assets that may not be easily converted to cash, like inventory. Meanwhile, the quick ratio is the proportions that consist of assets that can be easily liquidated; in other words, the assets that can be converted into cash easily. These assets can be in the form of marketable securities, account receivables, and cash equivalents. Quick ratios are better indicators of a business's capability to raise cash urgently. 

Metrics Involved in Working Capital Management

Days Payable Outstanding

DPO, or days payable outstanding, calculates the average number of days a business needs to cover its bills and obligations. Businesses that have a scaling DPO can make delayed payments and utilize the cash available for short-term investments to enhance their free cash streams and working capital. A higher DPO is desirable, but it also indicates negative aspects of a business. It can tell which business has a cash shortfall and is unable to pay on time. DPO depends on the domain of the business and the industry size; large-scale businesses are often able to negotiate better to make delayed payments.

Days Inventory Outstanding

DIO or days inventory outstanding is a count of the average number of days a business holds its inventory before any transactions. The calculation of DIO indicates how much time a business takes to turn its inventory into cash. Since DIO is a liquidity measure, it also tells about a business's financial and operational proficiency. Other terms that are prevalent in the market for DIO are- Days in inventory, the inventory period, and inventory days of supply. It also indicates whether a business is able to manage its inventory efficiently or if the inventory of a business is difficult to sell.   

Cash Conversion Cycle

CCC, or cash conversion cycle, is a measure that indicates the amount of time a business takes to turn its investments into inventory. It also indicates the time a business needs to collect receivables and pay its dues without incurring any penalties. The cash conversion cycle of a business depends on the business domain and the industry size. The formula to calculate the cash conversion cycle is- CCC = DIO + DSO – DPO, where the DIO is the days of inventory outstanding, DSO is the day's sales outstanding, and DPO is the days' payables outstanding.

Primary Working Capital Management Solutions by Enterslice

Electronic Invoicing

The process of electronic invoice submission can aid businesses in achieving working capital welfare. By organizing the invoicing procedures, a business can decrease the risks of making errors, automate manual procedures, and guarantee that your clients receive invoices as soon as possible. When the customers receive their invoices on time, the business will also get paid on time, hence enhancing the working capital altogether. Enterslice’s electronic invoicing services will let a business turn purchases into invoices quickly.

Inventory Management

A smart and prudent implementation of inventory management prospective solutions can aid a business in improving its balance sheet position and working capital position. It will happen by decreasing long lead times, safeguarding accessibility to reserved stock, and making the processes involved in inventory management more transparent and enhanced in general. Enterslice is fully equipped to provide best-in-class inventory management solutions and advisory.

Cash Flow Prediction

Through the process of forecasting or predicting upcoming cash streams like payables and receivables, a business will be able to plan for any future cash breaks or gaps and enhance the usage of surpluses. When a business is able to forecast its future cash streams precisely, it is likely to make better-informed decisions related to working capital management. With Enterslice's expert working capital management services, a business will be able to see significant improvement in its decisions and enhanced cash flows.  

Other Metrics Involved in Working Capital Management

Net Working Capital Value

It is the measure that computes the overall working liquidity of a business entity. The formula to calculate net working capital is Account receivables + Inventory – Accounts payables.

Net Working Capital as % of Sales

It is the measure that provides the percentage of working capital that is required to aid further sales. For example, $20 worth of working capital will be required to generate 20% of sales for every $100.

Shareholder Value Add

SVA is a measure that tells about a business’s worth to investors or shareholders. It is computed by subtracting the cost of capital from the issuance of equity and debt from net operating profit after tax.

Return on Capital Employed

It is the measure that tells a business about the profitability and efficiency of a business's capital investment. ROCE proportion must always be higher than a business's rate of borrowing funds.

Aspects of Negative Working Capital

Typically, it is not considered a good sign that a business’s current liabilities amount exceeds its current asset amount. Negative working capital indicates that a business will not be able to pay off its debts due to a lack of resources. In order to pay off its short-term bills and debts, a business has to find many unconventional and creative ways to do that.

Advantages of Hiring Enterslice Working Capital; Management Experts

There are several benefits associated with hiring Enterslice’s working capital management experts. One of the biggest advantages is that our experts will monitor and observe accounts receivable, stock, accounts payables, and debt management to ensure that there is cash available on hand. Working capital management done by an expert will also enable a business to conduct uninterrupted operations. They will also ensure that operation efficiency increases along with profitability. One of the major goals of working capital management is to comprehend cash going out of business and cash in the business. The process will also enhance the financial well-being of a company. Overall short-term liquidity, precise operations, continuous profitability, and financial well-being will ensure value addition to the entire business.

Risks of Not Hiring a Working Capital Management Expert

There are many risks associated with not hiring an expert for working capital management. Without the invention of an expert, it can be difficult to highlight any shortage of cash flows. If the outgoing cash is more than the incoming, then a business needs to reconsider the aspects.

Frequently Asked Questions

The four main components of working capital management are-

·        Inventory

·        Accounts Receivable

·        Accounts Payable

·        Cash

WCC or the working capital cycle is the time duration it takes to convert net current assets and liabilities to cash.

The five elements of working capital are listed below-

·        Inventory

·        Cash

·        Accounts payables

·        Accounts Receivable

·        Short-term debt

Seven determinants of working capital are listed below-

·        Domain and business size.

·        Production policy

·        Position of the business cycle

·        Dividend policy

·        Seasonal business

·        Credit policy

·        Market conditions

The three types of working capital are listed below-

·        Permanent working capital

·        Regular working capital

·        Reserve working capital

There are four types of liquidity ratios. The way to calculate them is listed below-

·        Current Ratio= Current Assets/ Current Liabilities

·        Quick Ratio= (Cash + Accounts Receivable)/ Current Liabilities

·        Cash Ratio= (Cash + Marketable Securities)/ Current Liabilities

·        Net Working Capital= Current Asset- Current Liabilities

The formula to calculate the operating cycle is Operating cycle = Inventory period + Account receivable period.

The operating cycle period is the time it takes for the business to buy goods, sell goods and receive cash for the goods.

Permanent working capital is the segment of working capital that is locked with current assets to carry the business smoothly. 

The components of capital are categorized in the following ways-

·        Debt Capital

·        Preferred Equity Capital

·        Common Equity Capital

Related Services

Our Awards Our Awards

Top 100 Companies in Asia - Red Herring
Top 100 Companies in Asia - Red Herring

Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten,, Xiaomi and YouTube would change the way we live and work.

Top 25 in India - Consultants Review

Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.

Top 25 in India - Consultants Review

We partner with more than 100+ companies

-- Testimonials

Don't take our word for it

In the news