Enhancing Financial Performance and Sustainable Growth in Food Processing SMEs through Working Capital Management Optimization: A Systematic Literature Review

Abstract

This systematized literature review explores the effectiveness of the working capital management (WCM) on the financial operations and long-term survival of small and medium food processing enterprises (SMFPEs). Food processing industry contributes to development through value addition, employment, and rural income diversification, but faces challenges as fragmented raw material supply chains, seasonal raw material availability, and inadequate finance. Efficient WCM is revealed as one of the strategic capabilities that increase liquidity, operational efficiency, and profitability. Some of the important short-term assets determine financial health and efficiency in production. WCM effectiveness is highly meditated by technological adoption, managerial competence as well as regulatory compliance. Empirical data confirms that optimized working capital cycles across regions enhance SME profitability, resilience, investment attraction, and sustainable growth. The review emphasizes interventions to overcome liquidity problems and strengthen WCM practices in food processing SMEs worldwide. The article presents text on WCM in SMEs.