The objective of Working Capital Management is to have more Working Capital. Working Capital is the money required to keep a business running. Requirements vary from business to business. Most businesses require some working capital, although there are exceptions. We will discuss this in the Swimfisher Airlines case study at the end of this lesson. But let us first understand some of the basics.

I. If the money is in your pocket, it is your money: This method of Working Capital Management is particularly prevalent in Delhi, although other cities have also begun to adopt it. It means that if you take money from someone, you do not necessarily have to do anything in return. It is advisable to check whether the other person is armed first. Liquor barons often forget to do this, leading to unfortunate results. The key to success here is finding non-violent people with poor memories who are willing to give you money.

II. If you and your employees are in the same building, make sure you pay their salaries every month: There are a variety of theories regarding why human beings work, but most experts agree that the primary reason is money. Depriving employees of money is dangerous, especially if they can catch you in the corridor. This is one reason why senior corporate people often operate from a different building, or at least a separate floor. If you are about to join a company and you discover that the boss has a separate lift with an armed guard standing in front of it – do not join this company.

III. Make your reception small and uncomfortable: During the course of running a business, you will owe people money. These people are known as vendors. If you avoid paying vendors, you will have more working capital.However, vendors are often persistent, due to their own working capital requirements. They will come and sit in your reception, expecting to be paid. Therefore it makes sense to make reception conditions as cramped and inhuman as possible. If you yourself plan to be a vendor, you shouldfirst go to your client’s office and check out the reception. Is it very crowded? Who are these people? Do they look miserable? If most of them are vendors – do not do business with this company.

IV. If you need a loan, avoid private sector banks: Private sector banks are expected to make profits, so if you borrow money from them they expect you to give it back. This is why you should always borrow from public sector banks instead. Public sector banks are more like charitable institutions, providing service to deserving candidates. As a member of the public, it is your duty to take as much money from them as possible. This is only fair, since as a member of the public, you will have to bail them out eventually.Which brings us to…

Case Study: Swimfisher Airlines

The Chairman looked at himself in the mirror and frowned. The bikini didn’t really suit him. He probably should have let the girl finish waxing, but the pain had been too much for him. Perhaps his son had fared better? “Sid, where are you?” he called out, “Let me see you, beta”. The aroma of Chanel No.5 filled the air as Sid came out of his dressing room. The pink floral bikini really suited him. He looked slim and fair and gorgeous. He bent his knee to display a smooth expanse of thigh, and pouted. His father clapped his hands. “Wonderful, beta! Maybe we could use you for all thepages. We could do different things with your hair!”

His son frowned. “I would do that for you, daddy”, he said, adjusting one of his false eyelashes, “But so far as the world is concerned, you are Swimfisher. They expect to see you”.

The chairman sighed and slumped back in his executive chair, which bore a sticker saying – Hypothecated to State Bank of India. It had been a glorious ride, filled with beautiful airhostesses, fabulous models, magnificent horses and handsome cricketers -some of whom he had loved -but now they were in a tricky situation. The Swimfisher Swimsuit Calendar was iconic. Every year, it proved to the world that the Swimfisher brand was still a force to reckon with, and worth pouring more money into. However, due to previous non-payment, no model was willing to come for this year’s shoot, leaving them with no option. The show had to go on.

How had things become this bad? He had always managed working capital exactly the way he had been taught. He had avoided paying taxes. He had avoided paying salaries. He had avoided paying for jet fuel, or electricity. He had even avoided paying for the little scented towels, one of which he was now using to dab his forehead. He had received over Rs 12,000 crore from various banks, who had been very kind and helpful, but now the banks were being mean to him. Perhaps if he went and met them in his bikini? It seemed unlikely. They were hard-hearted men, immune to beauty.

He looked at his son, who was dabbing himself with Estée Lauder and humming. He had never been the same since that hottie had dumped him. But he did appear to be enjoying his life as a model. Still, it was undignified. Was this really the only way to maintain confidence in the Swimfisher brand? Was there nothing else he could do to raise money and keep the flag flying?That was when he remembered. There was one, last, desperate chance left. It looked like a long shot, but MadhuTrehan had assured him that it would work. She had caught him stealing bread rolls at a party.

“Don’t go out just yet”, he told Sid, who was now applying suntan lotion. “Our case study is being featured in Newslaundry. Their readers are highly intelligent. Maybe one of them can suggest something.”

Can you suggest any methods, apart from modeling for the swimsuit calendar, by which the Swimfisher management can raise money to fill the gap in their working capital requirements? The best answers will feature in the next thrilling episode of… The 4-Minute Manager^TM.