The key to developing a successful business is sound financial planning. Even a company with a large number of clients and good, stable profits may face temporary financial difficulties over a short period.
It often happens that in financial reports, “on paper”, a business makes a profit. However, in fact, there is not enough money in the cash register. You cannot work normally and pay for immiate expenses: wages, interest on loans, and so on.
At such moments, management faces problems: the budget is there, but not in the cash register, the money will come later. At the same time, debts must be paid here and now. A dangerous situation arises, which is call a cash gap. It can cause extremely negative consequences and affect even a successful and seemingly profitable business.
What is a cash gap in simple terms
A cash gap is a situation in which a company’s accounts country email list temporarily lack funds to cover current liabilities. That is, the company is oblig to make certain payments – salaries, taxes, but the available money is not enough at the moment. At the same time, the company has enough profit: total income, for example, for the year is higher than expenses.
The dangers and consequences of a cash flow gap
At first glance, it is not always clear what is dangerous techniques for optimizing image loading spe about a cash gap and why it can theoretically lead to bankruptcy. After all, in essence, the company has money, it just nes to wait for it.
But the point is that the waiting period can vary from a few days to weeks or even a couple of months. During this time, the company may face serious financial and b2c fax legal problems. Let’s look at the main dangers and consequences of a cash gap in large, mium, and small businesses.