In the event that a business' cash budget forecasts a cash deficit for a short future period of time,what should be done?

Question

Quizplus · Accepted Answer

If a business forecasts a cash deficit for a short-term, the best option is to arrange for some short-term borrowing around the expected time of the deficit. This can be done through sources such as bank loans, lines of credit, or trade credit from suppliers. Closing the business or changing the credit granting policy can have long-term negative effects, and trying to decrease/cut costs may not be feasible in the short-term. Therefore, arranging for short-term borrowing is the best solution to address the cash deficit.

In the Event That a Business' Cash Budget Forecasts a Cash