One of the most popular questions I get asked as a contracted CFO is “where is my cash going?” So, I have put together a list of the most common causes of cash flow problems:

• Too Much Inventory



• Too much salary or too many withdrawals to the owner

• Doing business with unreliable or slow-paying customers

• Overhead is too high 

• Too much debt

• Undercapitalization

• Unexpected causality or occurrence

• Employee theft or embezzlement 

• Excessive purchases of fixed assets or capitalized costs

• Operating losses

• Paying bills too quickly

• Selling prices/profit margins are too low

• Not knowing how much your product/service costs

Take a look at this list.

Which area do you think is your biggest cash burner?

Even if you do not have a cash flow problem you should assess your risks in all of these areas.

If you do have a cash flow problem you should assess which areas are burning the most cash and work to address it.