If there isn't enough cash to meet financial obligations during that time, your business is vulnerable. Even small expenses should be closely monitored by management. Heavy borrowing to meet routine business obligations or to service existing debt spells danger. A business that takes longer than normal, such as 30 days, to pay suppliers may be in a precarious position. A large number of past-due invoices is a clear danger sign.
Withheld taxes are a tempting source of cash for many small businesses.
Since many small businesses pay income or sales tax on an installment basis, it is easy to dip into this reserve and mistakenly believe you can pay it back in time. All may be signs of poor business viability. Selling products or services at a loss just to create cash flow can even accelerate a business failure. You should seek professional advice, such as an accountant or insolvency practitioner . They can help create a recovery plan that may avoid alarming suppliers and customers.