Tom Andersen owns an electronics firm in Wichita. He has told you that he has been suffering some cash flow problems, but has avoided having to borrow money by letting some of his bills run late and by cutting corners on meeting some of his contractual obligations. When you raised your eyebrows as he told you this, he said, “Don’t worry; I’m really not nervous about it. I have some big orders coming in, and am confident I can catch up on my bills and renegotiate my contracts then.” Do you think Tom has a sound strategy?

What could he be doing differently? What are the downsides to what Tom is currently doing?