Causes of cash flow problems:

Cards (30)

  • Cash flow is the movement of money in and out of a business, which is crucial for paying bills, investing in growth, and avoiding insolvency
  • External causes of cash flow problems include economic conditions, industry trends, supply chain issues, and government policies
  • Internal causes of cash flow problems include slow payment from customers, overspending, seasonal fluctuations, and unexpected costs
  • Short-term cash flow problems arise from temporary disruptions and can typically be resolved within a few months
  • Steps to address short-term cash flow problems
    1️⃣ Short-term loans
    2️⃣ Payment plans
    3️⃣ Expense reduction
  • Short-term cash flow problems last for years.
    False
  • Cash flow is important because it enables a business to pay its bills and avoid insolvency.

    True
  • Industry trends like technological disruptions can cause cash flow problems.

    True
  • Effectively managing cash flow is crucial for a business to remain financially stable and continue operations

    True
  • External factors affecting cash flow are often outside the business's direct control but can be managed with anticipation

    True
  • Internal causes of cash flow problems are within the business's control and can be addressed with effective cash flow management
    True
  • Short-term cash flow problems arise due to temporary disruptions in cash inflows
  • A retail business might face short-term cash flow problems during a slow sales season like winter
  • Recessions are considered a key external cause of cash flow problems due to their impact on customer demand
  • Slow payment from customers delays cash inflows
  • Long-term cash flow problems can result in the inability to invest
  • Cash flow problems can lead to insolvency if not managed effectively.

    True
  • Match the cause of cash flow problems with its description:
    Slow payment from customers ↔️ Customers taking longer to pay invoices
    Overspending ↔️ Excessive spending on expenses or investments
    Seasonal fluctuations ↔️ Uneven cash inflows and outflows throughout the year
    Unexpected costs ↔️ Unforeseen expenses like equipment breakdowns
  • Match the external cause with its description:
    Economic conditions ↔️ Recessions, inflation, or macroeconomic factors
    Industry trends ↔️ Changes in competition, regulations, or technology
    Supply chain issues ↔️ Disruptions in raw materials or product supply
    Government policies ↔️ Changes in tax laws or trade policies
  • Match the internal cause with its description:
    Slow payment from customers ↔️ Customers taking longer to pay invoices
    Overspending ↔️ Excessive spending beyond the business's means
    Seasonal fluctuations ↔️ Uneven pattern of cash inflows and outflows
    Unexpected costs ↔️ Unforeseen expenses such as equipment repair
  • Match the category with its characteristics:
    Short-term ↔️ Duration: Weeks to months
    Long-term ↔️ Duration: Years
  • Short-term cash flow problems can be caused by seasonal sales declines or unexpected expenses
    True
  • What is a solution for short-term cash flow problems?
    Short-term loans
  • What is an external cause of cash flow problems?
    Recessions
  • What is an internal cause of cash flow problems?
    Slow payment from customers
  • What is the duration of short-term cash flow problems?
    Weeks to months
  • Match the type of cash flow problem with its solution:
    Short-term ↔️ Short-term loans
    Long-term ↔️ Financial restructuring
  • Steps of how cash flow problems impact business operations
    1️⃣ Difficulties paying suppliers and wages
    2️⃣ Delays in production
    3️⃣ Reduced service quality
  • Internal causes of cash flow problems are uncontrollable within the business.
    False
  • Cash flow problems can limit the ability to fund growth projects