When oil spills, cash flows

Abstract

Nearly seven million businesses—in Alabama, Florida, Louisiana, Mississippi, and Texas—may have been affected by the explosion of BP's Deepwater Horizon oil drilling platform. The total costs to those businesses remain unknown. But losses will surely be staggering, since the annual sales volume for these firms is $5.2 trillion. Some companies may also fall victim to fraudulent scams in connection with the oil spill. Because of an anticipated interruption in business and the likelihood of scams, companies should plan ahead for sustaining their operations. The authors examine strategies for improving short-term cash flow and look at long-term cash problems created by litigation for companies affected by the spill. They also take a close look at scams associated with this disaster—and show how companies can avoid them. © 2010 Wiley Periodicals, Inc.