Most businesses operate in cycles. That is, demand for products is higher at one time of the year than another. Or, the products or services have a long selling cycle before manufacturing, shipping, billing, and collecting. Very small businesses are very often caught in the net of the old line...if you're making money, you're not selling and if you're selling, you're not making any money...

Without good debt and operating liability management, many cash problems can develop. A business may find itself unable to pay the employees, suppliers, lenders, and other assorted vendors.

Asset acquisition and expansion, particularly if done with borrowed money can create cash requirements which compromise regular operations. Frequently, a great deal of time is spent analyzing the improvements to productivity and profits the asset will bring.

Unfortunately, in many cases the impact of payment timing is not considered as thoroughly. All too rapidly, the payment book for the new asset arrives. The new payment requirement may not be significant with a truck that can be put into service immediately. But, what about a machine or sophisticated system? And, what if the machine or system ultimately requires much longer to put into service than originally projected? Delays in starting service cause delays in reaching full capacity. However, the payment obligation may not be able to be changed. These kinds of circumstances can place additional constraints on already tight cash positions.

Other contractual operating expenses must also be figured into the debt management equation since they, like asset acquisition or working capital borrowing affect continuing cash adequacy and support for operations.