Company cash flow problems
Cash flow problems are the earliest and most common warning sign that a company is heading for trouble, and crucially they are the stage at which a director has the most options. A cash flow problem is not the same as being insolvent, but it can become insolvency if it is left unaddressed. Acting now, while the business is still trading and creditors are not yet at the door, keeps every option open. Insolvency Service; British Business Bank guidance
- What it is
- Not enough cash to meet bills as they fall due, on time
- Your runway
- Weeks of cash left at the current burn rate
- Is it insolvency?
- Not necessarily, but it can become insolvency if ignored
- Why act now
- This is the stage with the most options and least risk
Talk it through, free and confidential No obligation. We review your situation and point you to the right next step.
Know your runway
The single most useful number is how many weeks of cash you have left at the current burn rate. Our cash flow runway calculator works it out in seconds. If the runway is short, don't wait, because options narrow fast: take advice before the position hardens.
From cash flow problem to a plan
Depending on the cause, the fix might be renegotiating terms, tighter credit control, raising finance such as invoice finance, a Time to Pay arrangement, or, if the debt is structural, a formal rescue. Apply the insolvency tests so you know which side of the line you are on.
The warning signs, as a checklist
- Struggling to pay wages or suppliers on time
- Relying on the overdraft or director funds to get through each month
- Falling behind on VAT or PAYE
- Chasing late-paying customers to cover today's bills
Ticking one of these doesn't make the company insolvent. Ticking several, month after month, is how cash flow problems become insolvency.
Related data
Our UK late payment figures: How late UK businesses are paid, and what it costs them. Every page on our data hub names its official source.
Common questions
Is a cash flow problem the same as being insolvent?
No, but they are linked. The cash flow test for insolvency asks whether you can pay debts as they fall due. Persistent cash flow problems can tip into insolvency, which is why early action matters.
What should I do first about cash flow problems?
Work out your cash runway and the cause, tighten credit control, and talk to HMRC early if tax is slipping. If the gap is structural rather than temporary, take advice from a practitioner before it escalates.