Q&A - What are the main causes of a cash flow problem?
A cash flow problem arises when a business struggles to pay its debts as they become due.
Note that a cash flow problem is not necessarily the same as experiencing a negative cash flow. A business often experiences a net cash outflow, for example when making a large payment for fixed assets or where there is a seasonal drop in demand.
However, when cash flow is consistently negative and the business uses up its cash balances, then the problems become serious.
The main causes of cash flow problems are summarised below:
WOW! Business 2015 is tutor2u's resource packed CPD for ALL business teachers. It follows in the huge footsteps of TBBLE (The Best Business Lesson Ever) and provides all Business teachers with a brand new set of resources that can be used immediately within the classroom. Not to be missed!
Teaching & learning products
Worked A Grade answers to recent AQA GCSE Business Studies Unit 1 exam papers together with detailed examiner commentary