Managing Working Capital Crises – A System Dynamics Approach

The article analyses the “pros” and “cons” of different strategies to be adopted to manage and avoid working capital crisis situations in any organisation. The working capital position depends on many organisational parameters which are interrelated and interdependent, and also vary over time. In such a situation, the use of a system dynamics approach has been advocated to reflect the relevant dynamic cause‐and‐effect relationships for the development of appropriate long‐term and short‐term strategies.