Library

Contingency Planning with Cash Flow Shortages

Summary

A contingency plan is a course of action designed to help a business determine how to respond to possible future events. Contingency plans are often referred to as “Plan B”. One of the most common contingency plans used by a business, particularly a small business, relates to how to respond to the departure or absence of key personnel. Contingency plans related to how to respond to changes in projected cash flows are also important. This article discusses how to use contingency plans to respond to cash flow shortages resulting from relatively low productivity, or crop or livestock prices.