Working Capital Management

Preface

THIS BOOK IS ONE OF a series of textbooks developed by John Wiley and Sons. As the publisher observed the near-chaotic conditions in the credit markets beginning in 2008, it became apparent that there was a need for an explanation of business processes and specific ideas on changes to company structures and procedures.

Working capital management is the art—and increasingly the science—of organizing a company's short-term resources to sustain ongoing activities, mobilize funds, and optimize liquidity. The most important elements are:

• The efficient utilization of current assets and current liabilities of a firm throughout each phase of the busi­ness operating cycle.
• The planning, monitoring, and manage­ment of the company's collections, disbursements, and bank account balances.
• The management of receivables, inventories, payables, and international transactions to minimize the investment in idle resources.
• The gathering and management of information to ef­fectively use available funds and identify risk.

The liquidity crisis that was experienced in the United States has been the subject of numerous articles, congressional hearings, and general debate. Available data indicate that adjustments have been ongoing and may eventually lead to the opportunity for future business expansion now that this period is coming to an end. Despite some bankruptcies, companies have adjusted remarkably well to the contraction of credit and liquidity and to weakened economic conditions. Our ...