Working Capital Management for Indian SMEs: Why Cash Flow Kills More Businesses Than Losses

CA CS Nilay Shah | Last updated: 17 June 2026

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Many Indian SMEs fail not due to losses, but poor management of working capital, which is the cash needed for daily operations. Effective working capital management involves optimising the cash conversion cycle by improving debtor collection, inventory control, and payables. This article outlines common pitfalls and provides practical steps, including debtor and inventory management, payables strategies, and cash flow forecasting, to help businesses thrive.

Introduction A business can be profitable on paper and still run out of money. This is not a theoretical possibility it is one of the most common reasons Indian SMEs face financial distress or fail entirely. Working capital - the money available to run day-to-day operations is the lifeblood of an

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About the Author

CA CS Nilay Shah

CA CS Nilay Shah is a Chartered Accountant and Company Secretary based in Ahmedabad, Gujarat, with over 15 years of experience in taxation, compliance, and business advisory services.He is the Founder of Nilay Shah Associates, Ahmedabad a CA firm specializing in Income Tax, GST, Company Law compliance, and business a ... Read more

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