A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours. That means Underwater is facing a potential

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Business

Guest

27 February, 01:35

A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours. That means Underwater is facing a potential

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Answers (1)

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Rodolfo Greer · Answer 1

The answer is: cash flow problem

Explanation:

Underwater will have to pay for all the hotel expenses and other travel arrangements before any money is received, that means cash flows may become serious issues. The firm will have to constantly pay cash in advance for services and the possibilities for them to lose money increase. For instance, what happens if a client cancels his trips? The firm will lose money unless it is able to find a new client that wants the exact same trip.