A Study on the Role of Credit Policy on Working Capital Performance in Garment Retail Business.

ABSTRACT Working capital management plays a crucial role in the smooth functioning and profitability of retail businesses, especially in the garment retail sector where inventory turnover, credit sales, and seasonal demand are significant. Credit policy is one of the most important components of working capital management, as it directly affects cash flows, liquidity, and overall financial performance of a business. This study aims to analyze the role of credit policy on working capital performance in garment retail businesses. The research focuses on understanding how credit terms, credit period, collection policies, and debtor management influence working capital efficiency. The study uses both primary data collected through structured questionnaires from garment retailers and secondary data obtained from books, journals, and financial reports. The findings of the study indicate that an effective and well-structured credit policy improves liquidity, reduces bad debts, and enhances working capital performance. However, overly liberal credit policies may lead to cash flow problems and increased credit risk. The study provides useful insights for garment retailers to design balanced credit policies that support sales growth while maintaining healthy working capital levels. Keywords: Credit Policy, Working Capital Management, Garment Retail Business, Retail Finance, Liquidity Management, Accounts Receivable, Inventory Management, Cash Conversion Cycle, Financial Performance, Apparel Industry.