Your company is having "cash flow problems". How can it reduce cost WITHOUT firing staff-members or reducing salaries?

This is a very complicated question and to answer it you have to see the financial status of a company. Where can you cut budget. But this has to be done always , not only when you have a cash flow problem.

Make a cash flow schedule, dificult because you depend on payments, but with experience in the region posible, and every day keep calling after youre invoices, hire somebody for it. But also not only when you have a cash flow problem, always!

when it comes to the financial management of a growing company. The lag between the time you have to pay your suppliers and employees and the time you collect from your customers is the problem, and the solution is cash flow management. At its simplest, cash flow management means delaying outlays of cash as long as possible while encouraging anyone who owes you money to pay it as rapidly as possible.

Measuring Cash Flow  Prepare cash flow projections for next year, next quarter and, if you're on shaky ground, next week. An accurate cash flow projection can alert you to trouble well before it strikes.

Improving Receivables  If you got paid for sales the instant you made them, you would never have a cash flow problem. Unfortunately, that doesn't happen, but you can still improve your cash flow by managing your receivables.

Managing Payables  Top-line sales growth can conceal a lot of problems-sometimes too well. When you are managing a growing company, you have to watch expenses carefully. Don't be lulled into complacency by simply expanding sales

Surviving Shortfalls  Sooner or later, you will foresee or find yourself in a situation where you lack the cash to pay your bills. This doesn't mean you're a failure as a businessperson-you're a normal entrepreneur who can't perfectly predict the future. And there are normal, everyday business practices that can help you manage the shortfall.

Well, cash flow problems is effectively a separate issue than managing/reducing costs unless you pay for all your costs in the same period in which these incur. Since your main target is to reduce costs, you have your whole value chain to analyze and identufy which are value adding and non/less value adding activities to achieving your organisational goals and objectives. You should identify your core competences for the business and for the rest of activities you can consider lower cost options like outsourcing or removing from the value chain. In this process you can leave certain areas like staff as untouched if you feel so inclined.

Now on the other hand for cash flow problem you can decide on whether to use internal or external sources to improve cash flow. Internally you should consider each element in your balance sheet like receivables, Inventory levels, long term assets, payables, short term and long term loans and equity as well while paying dividends;  and in liaison with relevant departments for the issues you can try your best to optimize. Externally you can consider loans or other strategic issue to compromise on controlling interest.

Identify underlying causes of cash flow problems, i.e. poor working capital management, high interest payment. Firing staff needs to be one of the last options. Instead motivating staff to work more efficient, better credit control, negotiate with lenders may help to improve cash flow position.

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First use good capital  managment techniques and also implement capital rationing so invest only those projects which genrates maximum cash flows long term projects with low cash flows in early periods are not good in this situation on the other hand reduce unproductive activities which causes burden on cashflows of the company.

Reduce expenditures from anything extraneous to generating income.  Re-double efforts to collect debts, and visit all customers old and new for opportunities to do new business with them.  Maybe you're leaving money out there.

Cash flow is connected with Changes is in working capital and working capital means the difference of Current Assets and Current Liabilities:

Causes & Remedies

1.       Too Much money blocked with Sundry Debtors (TARGET ALL DEBTORS ACCOUNT WITH PROPER FOLLOW UP—REQUEST PAYMENTS FROM ALL ARREAR ACCOUNTS--OFFER TRADE DISCOUNTS TO MAKE ADVANCE PAYMENTS—PROPER FOLLOW UP BY SETTING UP A RECOVERY TEAM AND DIVIDING THE ACCOUNTS TO EACH MEMBER OF THE TEAM AND PROPER MONITORINGTHEIR EFFORTS)

2.       Too Much Inventory being held up in the business(REDUCE THE PURCHASES AND MANAGE THIS IN SUCH A WAY THAT INVENTORY UTILISED IN A OPTIMUM WAY)

3.       Cash Sales:   Less Cash sales  and more credit sales (IMPROVE THE CASH SALES  WITH SMALL DISCOUNTS—PROVIDE SALE INCENTIVES FOR STAFF FOR CANVASSING CASH CUSTOMERS—APPOINT ADDITIONAL SELLING AGENTS ON COMMISSION BASIS AND SALES EXECUTIVES ON BASIC SALARY+INCENTIVE BASIS TO FOCUS ON CASH CUSTOMERS—APPROPRIATE ADVERTISEMENT AND PUBLICITY THROGH ALL COST EFFECTIVE MEANS)

4.       Operating and Administrative Expenses are High (FRESH REVENUE EXPENDITURE PROPOSALS NEED BE POSTPONED—HIGH EXPENDITURE NEED BE CURTAINED AS FAR AS POSSIBLE—ALLOW EMPLOYEES TO GO ON LEAVE VOLUNTIARLY, IF THEY DESIRE SO—RESTRICT UNWANTED ABSENTISM OF EMPLOYEES SO THAT THE COUNTER BUSINESS ARE NOT AT ALL AFFECTED)

5.       Withdrawal from Personal Purpose/or Diversion of Funds to other purpose (WITHDRAWALS AND DIVERSION OF FUNDS ARE TO BE UNDER STRICT CONTROL WITH NECESSARY RESTRICTIONS)

6.       Lesser utilisation of Bank facilities(UTILISE THE BANK FACILITIES MAXIMUM, IF THE PRESENT REQUIREMENT ARE NOT SUFFICIENT REQUEST THE BANK FOR ADDITIONAL ADHOC FACILITIES OR GO FOR A WORKING CAPITAL TERM LOAN)

7.       The facilities with Sundry creditors are not adequate (FIND OUT NEW CREDITORS WITH HIGHER CREDIT FACILITY AND CREDIT COVER PERIOD—REQUEST THE SUNDRY CREDITORS TO MAXIMISE THE CREDIT PERIOD)

8.       The credit period with Sundry creditors are below due to stringent supplier attitude.(STRINGENT SUPPLIERS PAID IMMEDIATELY AND CLOSE THEIR DEALINGS—WITH THIS IT WILL CREATE POSTIVE ATTITUDE FROM CREDITORS SINCE  THEY ARE UNWILLING TO LOSS THEIR BUSINESS)

Much  more remedies:

9.       ADVERTISE PROPERLY

10.   APPOINTMENT OF SMART SALES EXECUTIVES AND MARKETING MANAGERS WITH THOROUGH KNOWLEDGE IN THE FIELD AND ARE HIGHLY PROFESSIONALS.

11.   HIRE A EXPERT PURCHASE MANAGER WHO IS VERY MUCH IN THIS FIELD WITH KNOWLEDGE OF ALL SOURCES

12.   INTRODUCE PARTICIPATIVE INVESTMENT BY EMPLOYEES FOR SELLING ONE OR TWO BRANDS WHICH HAS A LONGER CREDIT PERIOD AND QUICK SELLING SUBJECTS.

13.   INTRODUCE A “STAFF OF THE MONTH” AWARD WITH CASH PRICE FOR THE BEST PERFORMERS IN ALL THE FIELDS SO THAT ALL STAFF WILL WORK MOTIVATED.

14.   EXERCISE EFFECTIVENESS IN SUPERVISORY CONTROLS.

15.   INTRODUCE OVER-TIME TO GENERATE ADDITIONAL CASH SALES.

No way staff strength need be reduced—with incentives for cash sales/credit collection in case of bad and doubtful debts—Tight Inventory Management—

Sure everything will be solved.(increase the expenditure by Hire more Professional Staff--(I will go for this option)

Cash flow can be corrected by smart recovery plans, Aggressive followups with Customers/Debtors , bank borrowings and credit period enhancement.