What are the main cash flow problems?
Posted: Wed Jan 22, 2025 10:05 am
Failure to manage cash flow will certainly cause problems for your business, whether in the short, medium or long term. Given this, it is important to know the main consequences of this deficiency.
Not knowing where the money goes
“I do everything right, but I don’t know where my company’s money goes.” This is a norway phone number list phrase among managers, which should serve as a warning sign for identifying problems in the proper organization of cash flow.
So, if you don't know where every penny of your money is going and it always seems like your business is struggling to make ends meet, there may be something wrong with your accounting management.
A good cash flow allows everything to be controlled and analyzed in the smallest details, allowing adjustments, corrections and process reviews, aiming at the optimization of available resources and better management of everything that comes in.
Overdue bills
Lack of control over payments that need to be honored is also a sign that financial management is insufficient. Even if revenue is within expectations, without adequate planning of all commitments, there may not be enough money to pay them on time — which is best avoided, as it can further burden the cash flow due to the interest charged for late payments.
Lack of working capital
Cash flow and working capital are directly related. While the first concept encompasses the entire path of money within the administrative structure, the second term refers to the amount needed for the company to maintain its activities, such as paying employees and suppliers.
Therefore, without proper cash flow control, the business may see its working capital run out and lose the ability to even maintain the operation of what is essential for its continuity.
Not knowing where the money goes
“I do everything right, but I don’t know where my company’s money goes.” This is a norway phone number list phrase among managers, which should serve as a warning sign for identifying problems in the proper organization of cash flow.
So, if you don't know where every penny of your money is going and it always seems like your business is struggling to make ends meet, there may be something wrong with your accounting management.
A good cash flow allows everything to be controlled and analyzed in the smallest details, allowing adjustments, corrections and process reviews, aiming at the optimization of available resources and better management of everything that comes in.
Overdue bills
Lack of control over payments that need to be honored is also a sign that financial management is insufficient. Even if revenue is within expectations, without adequate planning of all commitments, there may not be enough money to pay them on time — which is best avoided, as it can further burden the cash flow due to the interest charged for late payments.
Lack of working capital
Cash flow and working capital are directly related. While the first concept encompasses the entire path of money within the administrative structure, the second term refers to the amount needed for the company to maintain its activities, such as paying employees and suppliers.
Therefore, without proper cash flow control, the business may see its working capital run out and lose the ability to even maintain the operation of what is essential for its continuity.