10 signs your cash flow is in trouble

Having a solid grasp of the money you’re owed—and when—is one of the most powerful skills a small business owner can build

Person in a suit waving a red flag

(Andy Ryan/Getty)

It’s not always clear when a company is about to run out of money—but there are some red flags that can signal trouble. Do any of these statements sound familiar?

1. Running low

We’re currently operating with less than three times our monthly expenditures available as cash in the bank.

2. Running late

More than half of our receivables are unpaid 90 days after the date of invoice, despite our best efforts to politely request remittance.

3. Mystery clients

We have no formal processes in place to gauge core clients’ ability to pay us. We don’t ask for credit applications before
we start work for them and have no way of checking their credit ratings.

4. More for less

One of our long-term clients has suddenly started paying us much more slowly than it used to but is ordering more than ever before.

5. Buck-passing

Our clients often ask us for extensions on their invoices while they’re waiting to receive money from their own clients. (The business equivalent of, “Don’t worry, buddy, I swear I’ll get you for this pizza later.”)

6. Arrested development

We’ve been in business for more than five years—well past the startup stress zone—but our operating expenses routinely eclipse our gross sales.

7. Flying blind

We can’t create a rolling budget because we don’t have a system in place to accurately collect financial operating data.

8. Maxing out

We’re very reliant on our line of credit for cash flow, and we’ve already had to go to the bank to ask for a limit increase more than once.

9. Fingers crossed

A major client has told us they don’t care what the cost is, they just want the job done; moreover, they won’t even discuss the expected tally, telling us “we can talk money at the end.”

10. Radio silence

There is little to no communication between our sales and finance departments.