Improving Cash Flow

• Businesses may experience financial problems due to negative cash flow, which essentially means that the money coming into the business in the form of revenue is less than that exiting in the form of expenses. To improve cash flow, companies can implement processes like more aggressive collection policies or increasing their sales force. They can also look for ways to trim expenses like eliminating stagnant products from their inventory or eliminating duplicate manufacturing processes.
  
  

More Capital

• Companies may seek an infusion of capital to keep the business operating. For larger companies, this may involve selling additional stock or partnering with another organization via merger or acquisition. Smaller businesses may elect to take on a partner who can supply additional funds, or seek an outside investor. Borrowing money from a bank or other lending institution may be another viable alternative as long as the business isn't already drowning in debt.
  
  

Layoffs

• A less palatable option is to lay off employees to cut expenses. In many companies, employee salaries and fringe benefits are one of their top expenses. Executive may choose to seek ways to consolidate job functions or eliminate unnecessary tasks. While layoffs are a quick way to eliminate expenses, they also create the need for the remaining employees to perform additional job duties. As a result, the company may experience a decrease in productivity due to an overworked, highly-stressed workforce.
  
  

Filing Bankruptcy

• Companies may choose to file bankruptcy as a last resort. When filing Chapter 11 bankruptcy, companies can essentially buy time to reorganize their operational structure and make payment arrangements with their creditors. In most cases, any planned activities that are outside the realm of the company's day-to-day operating procedures must be approved by the bankruptcy court. Companies that successfully emerge from Chapter 11 bankruptcy are often much smaller, leaner organizations with fewer operating facilities and employees.