Cash flow difficulties can happen to all companies at some time or another, an d some years this can happen to most of them . Small businesses that have a good product or successful services can still find themselves  near to insolvency through failures to spot weaknesses in their systems and lack of expertise in predicting difficulties before they happen. This may be acquired through experience, though if the company collapses it will be too late.

There can be a number of areas that contribute to cash flow difficulties. For example, accepting large orders from customers who turn out to have payment problems can be a disaster. There should be a policy for credit checks on new customers placing order that may well cause serious cash flow problems if they fail to pay.

Customers also will not pay until a job is finished  to their agreed specification. It is a dangerous situation to be in to have laid out the production costs without finishing the work and therefore not being able to cover costs. Production has to be efficient or cash flow problems result.

A poor system for taking orders can be the most crucial element in inefficient production throughput and consequent cash flow difficulties.  It has to be easy for a customer to order. Its no use having a production worker answering the phone from the workshop and expecting to maximise your sales. There should be an efficient telephone service and ideally email and internet facilities. There should be a prompt reply to all enquiries. You may be busy this month but what about next month?