Cash flow problems can be a cause of business failure. This can happen in a growing business for a number of reasons and is not only a symptom of an under performing organisation.
Companies that are growing quickly, possibly because of winning a new contract can often suffer from a cash shortage due to lock up in stock, work in progress and debtors. It is crucial that this process is managed effectively by planning cash flow requirement and if necessary, arranging for funds to be available to cover the funding gap.
If cash flow is managed effectively, then stakeholders will give the business greater credibility but will also facilitate accurate and effective decision-making.