Cash Flow Problems
Problems with cash flow occur when an enterprise fails to pay its due debts. Negative cash flow is generally considered to be fatal for any business. At Bridging Funding, we can help you get short-term loans to solve cash flow problems.
The causes that lead to cash flow problems are:
- Low profits – Loss or profit has a direct connection with cash flow issues. Most companies that are incurring a loss in business ultimately run out of money.
- Over-investment – This usually happens when a firm spends excess on production. Factory instruments which are not used for generating revenues are just a waste of money.
- Keeping excess stock – Storing excess stock engages money. There is a risk that the stock will become obsolete in the future.
- Giving too much credit to the customers – Customers who rely on credit to buy things are referred to as “trade debtors”. Though this is a nice way to accumulate revenue, late payment puts a lot of strain on the cash flow.
- Overtrading – This happens when a business grows too fast, putting excess pressure on its available short-term funding resources.
- Seasonal demand- Cash flow problems also depend on the changes in demand. As these changes are assumed, a firm is expected to tackle them efficiently.