Working capital is not a finance problem. It is an operations problem.

The vendor payment process in most MSMEs tells you almost everything about why working capital is tight.

When a promoter tells me about a working capital crunch, I do not ask about his overdraft limit or his banker relationship. I ask him to walk me through how a vendor gets paid. That conversation is usually enough to identify where the problem actually lies.

In the telecom infrastructure work I was part of, we were running monthly billing cycles across multiple vendors in three states. At that scale, a slow payment cycle did not show up as a finance problem. It showed up as contractor disengagement, delayed mobilisation, project slippage. The cost was operational and significant, but it never appeared on the P&L in a way that made the cause obvious. You felt it as friction before you saw it as a number.

That experience changed how I look at working capital entirely.

In most MSME businesses, working capital is treated as the CFO's problem, or the CA's, or the banks’. The overdraft gets extended. The month passes. The same problem returns the following month, because the underlying cause was never touched. The cause is almost always in the operations.

Here is where the cash typically gets trapped:

• A billing milestone that is not clearly defined gives the client's team room to dispute the invoice. The cash does not come in.

• A vendor who is not paid within a committed window starts quoting with a buffer built in. Input costs go up, not dramatically, but consistently.

• Material that is not tracked from receipt to deployment leaves overages that accumulate quietly over months.

• A subcontractor whose work is not formally accepted before his bill is processed creates a dispute that freezes the account until someone resolves it.

Each of these is a process failure, a contract design failure, or an execution failure. The working capital shortage at the end of the month is where they all collect.

Some businesses carry structural working capital pressures that no process improvement will remove. But for most small and mid-sized businesses, the recurring monthly crunch has a procedural cause.

Before calling the banker, it is worth sitting with a few questions. Are billing milestones defined in every contract and tracked to completion? Is there a committed payment window for every vendor, and is it actually being met? Is invoicing going out with the right documentation and approvals, at the right time? Is material being tracked through its full journey, or only at the start and end?

If the answer to any of these is uncertain, the crunch will return regardless of how much credit the bank extends.

The cash is often already inside the business. The question is whether the operations are structured to release it.