2 min read
The overtrading trap
Rapid sales growth ties up cash in stock, work-in-progress and unpaid invoices before customers pay. Even a profitable, growing business can hit a wall where it cannot pay suppliers or wages — profit on paper, no cash in the bank.
Avoiding it
Forecast the working-capital need of new business, tighten collections, and arrange funding before you commit. A facility sized to the growth bridges the gap. Test it with the affordability calculator.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. A pre-arranged facility, with no personal guarantee, lets you say yes to growth without overtrading into a cash crisis. See business loans or apply online.
Frequently asked questions
Can a profitable business run out of cash?
Yes. That is overtrading — growth ties up cash in stock and unpaid invoices faster than profit converts to money, so the business is cash-starved despite being profitable.
How do I avoid overtrading?
Forecast the working-capital need before taking on new business, tighten collections, and arrange funding in advance to bridge the gap.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.