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Old 21st June 2013, 09:24 PM   #1
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Join Date: May 2010
Location: Detroit, MI
Posts: 1,289
Default How To Meet Emergency Cash Needs?

For small business owners, cash flow is equivalent to blood flow. When it is flowing well without hiccups the system (business) works just fine. You spend cash buying inventory, leasing equipment, making repairs or doing anything else that will help produce goods and services that you can sell to customers and receive cash in return. This cash can then be deployed again for the above mentioned purpose and the cycle continues. Hopefully, you are receiving more cash than spending it, resulting in positive cash flow.

However, if the system develops a clot that restricts the flow of blood (cash) problems can arise, sometimes leading to a fatal outcome. That is why you have to watch the cash flow and cash reserve like a hawk and ensure that you have extra cash cushion available to take care of emergencies on a short notice. These emergencies can arise out of nowhere and on a moment’s notice. For example, the equipment may break down and need repair at that moment or the production will stop. You receive a large order from a customer and need cash to buy raw material before the order can be produced. Regardless of the type of emergency, if you do not have the extra cash cushion it can create a difficult situation for your business, resulting in stopped production or having to turn down that large order.

Read more - http://www.smallbizviewpoints.com/20...cy-cash-needs/

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