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Five Severe Warning Signs of Cash-Flow Problems

 

Keep an eye on your cash flow, and look out for these warning signs that could signify problems:

  1. Decreased liquidity: running out of working capital.
  2. Overtrading: turning inventories faster than trade averages.
  3. Excessive short-term debt.
  4. Missing discounts: payables over terms.
  5. Slow collections: outstanding receivables piling up.

This material was adapted from Chapter 7 of Financial Troubleshooting by David H. Bangs Jr. and Michael Pellecchia.

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