The founders of a small consulting firm recently received a letter from an important Fortune 500 client that the large company would extend its payment terms from 90 to 120 days, “a fancy legalese version of “we’re going to start paying you later because it’s better for us: get used to it,” she says. While she wait four months for payment, this entrepreneur must meet the payroll for her 2 employees: pay, rent, utilities, insurance, and a host of other operating expenses: and purchase new computers and other technology to support the work her staff does. Managing cash flow for her business has become more complex, a situation that many small business owners are facing as large companies stretch their account payable and speed p collections of their own accounts receivable.

Q1. How typical are the cash flow problems that these companies face? Explain

Q2.What advice can you offer business owners about managing their cash flow?

Answer rating: 100% (QA)

1 Most of the small companies face cash flow problems dye to instability in operations More often sm... View the full answer