Recognizing Cash Flow Problems

Cash flow problems are common with small businesses, and although many time people have a hard time figuring out the cause, there are really only just a few ways they come about:

1. Too much cash tied up in receivables ( or for products-oriented companies in inventory);
2. Too many customers who aren't paying you on time (or are bad debts);
3. You are spending too much on overhead;
4. Weak gross margins (i.e. your prices are too low).

Understanding the cause of your cash flow problems is the first step to solving that problem.