Working capital is current assets minus current liabilities: the money tied up in running the business day to day. Worked example: Rs 15 lakh owed by customers, Rs 12 lakh of stock and Rs 3 lakh of cash, against Rs 18 lakh owed to suppliers and other bills due within the year, leaves Rs 12 lakh. Manage it through the cash conversion cycle, days of stock plus days customers take to pay minus days you take to pay: 45 + 60 - 30 means 75 days of your own cash behind every sale. Shorten it by collecting sooner (an MSME can discount invoices on large buyers on a TReDS platform), holding less stock and agreeing longer supplier terms, and fund the gap with a working capital loan, not equity.
A clear explainer of working capital as current assets minus current liabilities, with a worked example, what positive and negative working capital mean and a free template.
Explains the cash conversion cycle as days inventory outstanding plus days sales outstanding minus days payable outstanding: how long your own cash is tied up between paying for stock and collecting from customers.
This is the runway math done in rupees, for the Indian founder, so you plan for 18 to 24 months instead of discovering a hole. It sets stage benchmarks (a seed startup burning Rs 15 to 40 lakh a month should start raising with 9 to 12 months left, since Indian Series A takes 5 to 9 months to close) and forces you to count the burn founders forget: PF/ESI on top of CTC, a 30 to 60 day GST input-credit lag, and lumpy advance-tax instalments. Measure burn from your bank statement, not your P&L, or the crunch hits earlier than your model says.
RXIL runs one of India's TReDS platforms, where an MSME seller can get invoices raised on large buyers discounted by banks and NBFCs, turning receivables into cash before the buyer pays.
The site of the trust set up by the MSME Ministry and SIDBI that guarantees collateral-free and third-party-guarantee-free loans made to micro and small enterprises by member lending institutions.
