Proper working capital management is essential for the long$-$term viability of a firm because:

$$ a firm$$s cash inflows, including the collections from its credit sales, tend to occur long after its cash outflows, including the payments for its productive resources; and

$$ the value of a firm$$s sales and costs are less $,$ which means that they cannot be forecasted with compete accuracy and means that a firm should maintain a backup quantity and source of liquidity.