Final answer:
Increasing payables, retaining employees, and borrowing money are all effective strategies for handling cash shortfalls in small businesses.
Step-by-step explanation:
When facing cash shortfalls, small businesses can employ various strategies to handle the situation. One effective strategy is increasing payables, which involves extending the payment terms with suppliers or negotiating longer credit periods. This allows the business to hold onto cash for a longer period of time, helping to address the immediate cash flow issues.
Another strategy is retaining employees. By keeping their workforce intact, small businesses can avoid incurring costs associated with hiring and training new employees. This can help conserve resources during cash shortages.
Finally, borrowing money is a common strategy to manage cash shortfalls. This can be done through loans from financial institutions, lines of credit, or other forms of credit. Borrowing provides immediate access to funds that can be used to cover expenses and bridge the gap until cash flow improves.