Can a company have profits but no cash?
It is a problem faced by many companies. Delayed receivables from clients are one common reason. In such cases, cash on the balance sheet has already been invested in existing projects. One of my clients got into serious financial difficulties because of cash flow-induced stress.
Wage payments routinely get delayed in such cases. Quality human resources tend to leave, and the revenue-generating capability of the company gets impaired. Your best contractors exit because you do not have the cash to pay them in time. The company was forced to borrow at high-interest rates.
Cash flow challenges, if left unattended, have caused many profitable companies to go bankrupt. It is something that the corporation should immediately address before these threaten the company’s survival.
If your company cannot dig itself out of cash flow-related problems, it is best to consult with a turnaround consultant. Please do not delay.
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