Causes of cash flow problems
Some primary causes of cash flow problems include:
- Low profits and downturn in revenue.
- Buying too much stock.
- Allowing customers too much credit.
- Seasonal demand.
- Bad debt.
- Slow-paying accounts.
- Increasing expenses.
- Sudden or rapid growth.
- Being undercapitalised.
- Funding of long-term assets out of cash flow.
- Paying cash for equipment or plant.