As someone who has been a business owner and CFO for many years, I have seen the many causes of Cash Flow Problems.  Some causes might be obvious but others are more subtle.  As a result, many do not know they are heading toward an issue until it is too late.  Without further adieu, Cash Flow Problems are caused by:

• Too much inventory
• Too much salary to the owner or too many withdrawals by the owner
• Doing business with customers who are slow paying or who do not pay at all
• Overhead being too high
• Too much interest expense on debt
• Undercapitalization from the beginning
• Unexpected casualty not covered by insurance
• Excessive purchases of fixed assets and capitalized costs.
• Operating losses
• Paying bills too quickly

These represent the key causes of Cash Flow Problems. As previously stated in prior posts, I identify ways to alleviate Cash Flow Problems once these events occur.