Topic
Cash Flow
Articles tagged “Cash Flow”.
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CFONegative Cash Flow: What It Means, When It's Dangerous, and How to Fix It
Negative cash flow means more cash left your business than came in during a period. It is a liquidity signal, not a verdict on profitability — a company can post a profit and still run out of cash. Where the negative number sits matters more than its size. Negative investing cash flow during expansion is often healthy; negative operating cash flow for three or more consecutive months is the real warning sign. Growth itself consumes cash. In our worked example, a ₹48 crore manufacturer growing 30% earns ₹5 crore in profit yet ends the year ₹1.5 crore cash-negative — and a 15-day slip in customer collections deepens the hole by another ₹2.6 crore. India-specific traps make it worse: GST is payable on invoices before customers pay, and stretching payments to registered micro and small suppliers beyond 45 days can cost you your tax deduction for that expense. The fix is a 13-week rolling cash forecast plus working-capital levers — collections, inventory and financing tenor — not blanket cost cuts.