Cash Flow Problems - Bus. Man. SL IB - Unit 3: Finance

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.