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Cash Shortages Essay

935 words - 4 pages

Cash shortages have caused many small businesses to go into financial ruin. This is a result of entrepreneurs not fully understanding the concepts of cash management. Every small company is vulnerable to cash management issues when they are in the beginning stages of life. My proposed small business will be no different. The greatest cash management problems I expect to face in my business involves collecting (accounts receivable) and disbursing.
My proposed small business is a crisis management firm. The company will be primarily service based. This means that most of the cash that is brought in will be dependent on clients paying for the services we offer. Launching this type of company ...view middle of the document...

This struggle with collecting accounts receivable has the potential to ruin the business if procedures are not put in place to boost cash flow by attracting clients that do pay on time.
Cash disbursements . It may be cheaper for companies to design in-house training methods because they have the necessary capabilities to create their own development programs. Outsourcing these skills and human capital from the external labor market requires organizations to collaborate with firms that may use capabilities more advanced than in-house producers, proving to be more expensive. Similarly, with suppliers, if they are not capable of creating abilities and talent that are efficient for organizational use, then companies may choose to “make” their own. Lastly, “making” is a good idea for organizations seeking to protect their ownership over training and development capabilities that they have created. Organizations that use outside sources to develop skills and talent leave their innovative training methods open for other firms to use. Therefore, “making” allows organizations to guard their self-made technology and development efforts. In contrast, organizations may choose to “buy” skills and talent if they lack the knowledge to produce their own training and development programs. External sources may be the only plausible option to select due to a lack of expertise. Additionally, the quantity of talent required may be small; resulting in organizations “buying” from the external labor market using the staffing function. “A company may consider outsourcing products with low-volume demand” (Bremmers, 2004, p. 66). “Buying” is also a good idea for training and development because the external labor market gives companies numerous access points to skills and human capital whereas “making” would only give them access to their own resources. In terms of skills and talent not being essential...

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