BusinessFailure

A summary of the causes of business failure is provided in this article, they are:

“Bad management including:

	over-dependence on one client;
	fraud;

	imprudent accounting;
	over-optimism in planning;
	erosion of margin;
	over-gearing;
	loss of long-term finance;
	lack of working capital and/or cash flow;
	excessive overheads;
	loss of market;
	fall in sales.

Unexpected event;

such as an uninsured fire or medical scandal.

Bad debts;

a lack of credit management.”

Extracted from Cathy Hayward’s article “Going for Broke”, which is featured in the April 2001 edition of “Financial Management”.

“Financial Management” is a magazine published by the Chartered Institute of Management Accountants (CIMA). Write to financialmanagement@cimaglobal.com or visit http://www.cimaglobal.com.

Editor: Ron Wells