Top 15 finance warnings that could close your business

3. Shortage of cash flow

Sales may be going up and profit may be up, but the working capital terms are very long or your business is not good at collecting revenue. The business may be profitable but there is no cash. There is a big difference between profit and cash. Cash is king.

The ability to generate cash is an important key to business success. Without a strong, positive cash flow a business will never thrive and grow. While it may be normal for some businesses to experience fluctuations, it is critical to be able to balance the high and low cash flow seasons. If cash flow continues to fall, then the business will not survive.

4. Overdraft is at its limit
Your Overdraft is near or at its limit for a significant period of time.

5. Bank contacts you unexpectedly
Bank requires more information or security to maintain your credit facility or has suggested refinancing.

6. Financial accounts are not accurate, timely, read regularly and understood
World financial mentor Tony Robbins lost $100 million because he took no interest in his financial accounts and allowed his CFO to defraud him. Now he can understand his financial accounts really well! All business owners need to appreciate that they need to take the time to have in place good administration practices and robust systems to ensure they are getting quality information in a timely and accurate manner.
At the most basic level, business owners should have a clear understanding of their Profit and Loss, Balance Sheet and Cash Flow to avoid financial strife.

7. Unable to convert accounts receivable and inventory to cash
Check the credit terms you are granting for your Accounts Receivable and check the quality of products being delivered to you. You must be able to convert these promptly to cash as this can also affect your cash flow.

8. Difficult meeting supplier terms
Suppliers are threatening COD terms or stop supply, issuing demands or threatening legal action. Balances are increasing while Debtors and Inventory remaining static.

9. Unable to place stock orders
Unable to place orders for stock due to cash constraints.

10. Unable to pay statutory and other obligations on time
Difficulty paying GST, Payroll Tax, Insurances, WorkCover and Superannuation regularly on time.

11. Needing to sell capital assets
Required to fund ongoing trading.

12. Staff morale is down, Above average staff turnover and other issues
Morale down due to awareness/lack of motivation, Perception of cash flow difficulties and higher than normal turnover.
Most employees can sense that a business is in trouble. It can start with salary delays or cutting off of bonuses and benefits. If employees sense that the culture, environment and atmosphere of the company have become bleak, then this will have a direct impact on their productivity and quality of performance. Without the results you are expecting from your staff, your business will suffer.

13. Communication breakdown between upper management and staff
When there is breakdown or failure in communication, management will not be able to identify conflicts in the everyday operations of the business. When conflicts are not identified, they will not be addressed or solved.

14. Delaying equipment maintenance and replacement
Putting off costs of maintenance & replacement could cause a significant interruption to running your business.

15. You dread going to work every day
Your passion for your business is gone. You are always exhausted but you feel that you can never take a vacation because business functions solely depend on you. If your business depends on you alone, then it will never grow further from that. You must have effective management and best practices in place so that even if you are away, you can be certain that your business is healthy and growing in revenue.