Working Capital Management

Working capital= Total current asset- Total current liabilities.

The third party and the factors you cannot influence directly in WC is creditors and debtors. WC management means the time you take to collect your money from debtors to pay off the creditors. if debtor collection < creditor payment, this is bad WC management and vice versa

It’s not necessarily as simple as debtor collection needs to be faster than creditor payment. You need to take things such as discounts into account. It may be cheaper to pay creditors faster (and fund any shortfall using an overdraft) if the discount received (converted to an annual rate) is greater than what is charged by a company’s bank for an overdraft.