Early Warning Signs Your Business is in Financial Distress

Early Warning Signs Your Business is in Financial Distress

Often, when a business fails, many business owners sit back and wonder what went wrong. Although the failure of a business may seem sudden, there are clear warning signs that signal your business is in financial distress. If these warning signs weren’t overlooked, the damage could have been reversed before it was too late, saving the business from failure. Business Loans Direct features some of the top early warning signs of financial distress to help you take the needed actions for recovery.

Decreasing Cash Flow
It’s not uncommon for businesses to lose money some quarters, leading many business owners to believe they will make up the loss the following quarter. But, this doesn’t always work. If you don’t adjust your expenses and evaluate your balance sheet to see where the cash losses are occurring to create a plan of action, it can cause a big financial hole that is too deep to climb out.

Difficulty Making Interest Payments
If you have no money left to make your interest payments, you’re not going to be able to keep creditors at bay. You need to have a cushion that allows you to make interest payments without worry. But, if you’re struggling to scrape by to pay interest payments and other bills, your current cash ratio isn’t enough to pay your short-term debt obligations. Without a comfortable financial cushion, one unexpected expense will take down your business.

Tapping into Savings
It’s not uncommon to have to tap into savings when unexpected financial situations occur from time to time, but if you find yourself tapping into savings more often than not, your business is in trouble. If you’re having to use your savings to cover monthly costs, your business is already heading towards failure.

If you’ve noticed these warning signs that your business is already in financial distress, Business Loans Direct can help you recover to provide you with the funds you need to stay afloat. Then, repay the loan amount with flexible options to keep your head above water and your business moving forward.

Alyssa Ast

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