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Payment difficulties and a financing crisis

Reasons for payment difficulties may include

  • an important customer is unable to pay its invoices to your company on time
  • your becoming ill if your company is very dependent on your personal input
  • a momentary decline in the number of orders
  • expanding your business operations too quickly
  • your company has substantial receivables with long payment periods.

Payment difficulties often arise unexpectedly. They may occur even if your business is profitable. Fortunately, payment difficulties are often only temporary.

Financing crisis

If your company's payment difficulties persist, this may result in a financing crisis. In such a case, your company cannot pay its bills, taxes and other payments on time. Therefore, the clearest sign of a financing crisis is that your company’s revenue does not cover the expenses, and its funds decrease.

Text edited by: editorial team
Updated: 28/12/2020