A key reason for business failure is poor cash management. If you don't pay attention to your daily cash flow, you face extinction; yet so many business people loss site of their cash flow. No matter how fantastic your company's products are, you will not survive unless you generate sufficient cash flow to sustain it. It is not the goods or services that are the end-products of your business, it is cash.
1. You are exhibiting a decrease in liquidity (you are running out of working capital).
2. You are overtrading by selling more than you are capable of dealing with financially.
3. You have excessive short-term debt.
4. You are missing discounts on your payables or you are paying them beyond the stated terms.
5. You are collecting your receivables slowly and outstanding receivables are piling up.
Jeff Schein is a CGA and offers advisory services in the areas of business planning, business modeling, strategic planning, business analysis and financial management for new ventures and growing small businesses. Visit www.companyworkshop.com or mailto:jeff@companyworkshop.com
