Title: The Components of Working Capital Management
Headings: The Components of Working Capital Management
The Components of Working Capital Management
What Is Working Capital Management?
Working Capital Management Deconstructed
Key Takeaways
1. Accounts Receivable
2. Accounts Payable
3. Inventory
Working Capital Management in a Nutshell

Content: Conversely, if a company invests excessively in cash and liquid assets, this may be a poor use of company resources. Key Takeaways
Working capital management is crucial to ensure that a company maintains sufficient cash flow to meet its short-term operating costs and obligations. The elements of working capital are money coming in, money going out, and the management of inventory. Companies must also prepare reliable cash forecasts and maintain accurate data on transactions and bank balances. If a company cannot meet its short-term obligations, it may face bankruptcy while holding excessive liquid assets or cash may not be the best use of its resources. These are three main components associated with working capital management: 1. Accounts Receivable
Accounts receivable are revenues due—what customers and debtors owe to a company for past sales. A company must collect its receivables in a timely manner so that it can use those funds to meet its own debts and operational costs. Accounts receivable appear as assets on a company's balance sheet, but they do not become assets until they are collected.