According to the cash flow approach, here's how each recommendation would impact cash flow:
1. Raise insurance deductibles:
- This action can have a positive cash flow impact because by increasing the deductibles, you reduce the amount you pay in premiums. This means you would have more cash on hand due to lower insurance costs.
2. Reduce insurance coverage:
- Reducing insurance coverage can also lead to a positive cash flow impact as lower coverage usually translates to lower premiums. This results in more money available for other expenses or investments.
3. Increase insurance coverage:
- Increasing insurance coverage typically leads to higher premiums. Therefore, this action would have a negative cash flow impact as you would need to allocate more money towards insurance expenses.
4. Cancel insurance coverage:
- Canceling insurance coverage would have a negative cash flow impact. While you would save on premium payments in the short term, you would be exposed to higher financial risks in case of unexpected events. This could lead to higher costs later on if you face a situation where insurance would have been beneficial.
In summary, raising insurance deductibles and reducing insurance coverage would have a positive cash flow impact, while increasing insurance coverage and canceling insurance coverage would have a negative cash flow impact.
