No doubt, the term “poor cash flow” is one of the major reasons why most businesses fail. So, how do we define a poor cash flow situation? In this video, we’ve compiled the ten most common causes of poor cash flow and provided solutions as to how yo…
No doubt, the term “poor cash flow” is one of the major reasons why most businesses fail. So, how do we define a poor cash flow situation? In this video, we’ve compiled the ten most common causes of poor cash flow and provided solutions as to how you can fix them.
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According to a study by a U.S. Bank, 82% of small businesses fail due to poor cash flow management.
What is the leading cause?
• Clients are not paying the invoices promptly.
As per research, approx. $825 billion constitute of unpaid invoices to American small business owners, which mean $84000 is owed per every small business.
10 Alarming Signs that your Business has a Poor Cash Flow
1. Short-term debt overload
Many small businesses take short term loans (3-18 months loan) to build their business, which needs to be paid timely. And not paying installments on time can lead to an increase in the debts’ amount in the long term.
2. Slow receivable collections
It is the biggest challenge in maintaining cash flow. A wide gap between paying for your materials and being paid by the customers for the end product may result in poor cash flow.
3. You're growing rapidly
When a business experience immense growth suddenly, then there's a need to hire more people, find a bigger space, get more resources, etc. If you don't have cash in reserve, then your business may suffer from a cash flow problem.
4. Y..
