Causes of Cash Flow Problems (ALWAYS ON TEST)
Over trading
Business accepting more orders than they are able to produce
Over borrowing
Business taking out too many, too big loans and not being able to pay them back in time → leading to debt
Over stocking
when the business has more stock than they are able to sell → wasting money
Poor credit control
Allowing to many customers Trade Credits → not having enough money in the present
Unforeseen changes from the external environment
unexpected events such as economic downturns, changes in consumer preferences, or new regulations that can negatively impact a business's cash flow.