3 Symptoms Of Cash Flow Problems

Cash, and the ability to maintain a strong, positive cash flow, may make the difference between the business you want and the business you want out of.  Cash flow problems are responsible for causing over 70% of businesses to fail within their first year of operation.

Bad or inadequate cash flow is largely a management problem having roots in your business’s founding. That vision statement you lightheartedly developed could have planted the seed for a whole host of problems including inadequate cash coming into the business. Having a clear focus and vision of where you are headed is critical, it one of the determining factors in speeding your money wisely.

So if you have a cash flow problem what are the symptoms?

1.     Customers you’ve extended credit to aren’t paying or aren’t paying on time.  In effect, you become a bank. Your cash is tied up financing your accounts receivable.

2.    You have a lot of debt. There’s nothing there to help build cash reserves. Because of your accounts receivable and lack of cash you may become delinquent in paying your creditors on time and generate your own stack of late fees. Now you find yourself with an accounts payable problem.

3.    While most small businesses struggle finding financing you may be over financed.  You’re holding onto money you have no immediate need for and you’re accumulating interest expense. The ability to borrow may ease cash flow problems but they may also just do so temporarily.

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