Reasons for mismanagement of business fund.

[btaliat]

It is not a gainsaying to conclude that most business men have mismanaged their business funds which has truly led to the closure of the business. The following are the reasons why most business owners do mismanage their business fund:

Small business: most small businesses are prone to being mismanaged compared to those big businesses. This is because most big businesses will always make employ the services of external auditors to monitor the activities in the business.

Bad Debt: this has caused most businesses to fold up. That's why it is not really advisable for small business owners to be selling on credit.

 

[Axis]

The mismanagement of a business fund can be done because a business organization does not see the need to carry out financial planning and financial budgeting which are the most important and creative tools when it comes to managing business funds and revenues. It is however very much important that a business owner or business manager make good use of planning tools and budgeting strategies. When a business owner make good use of budgeting strategies it would be able to differentiate the business needs from the business ones and of course make sure to achieve the needs since it is the business necessities and let go of the ones since they are just mere desires.

 

[saoussen5765]

I can tell why business funds for small businesses are often mismanaged. Some small business owners have only that business as their only source of income and most times, those businesses are not yet strong enough to be a source of livelihood. They would necessarily dip their hands into the working capital and end up mismanaging it.

Another reason is that some business owners allow themselves to be deep into financial matters in the business. I always advocate that as a business owner, one should have a staff that handles financial matters. A business owner handling the finances of his business doesn't have any restraint on spending it because no one would question him or her.

 

[Etini]

It is only ingenuity that can make a small business owner be able to distinguish between business funds and personal funds. When that distinction is not made, it would always lead to mismanagement of business funds. And also, business funds should not be held for too long a time without being deployed for business operations. You are setting a trap for yourself and that business funds if you hold on to it for too long without using it for the business purpose it was ment to be used for.

I always make sure I buy feeds as soon as possible when I start making sales in my poultry farm so that the funds would not be used for something else.

 

[Ramolak19]

Well I will like to make my own contribution although most people have made some good point. While I also think lack of financial literacy or experience, inadequate budgeting and financial planning, insufficient monitoring and oversight of spending, dishonest or unethical behavior on the part of staff or management, unanticipated costs, external economic factors, or just bad decision-making can all lead to mismanagement of business funds.
Mismanagement of funds inside a corporation can also result from other issues like risky investments, excessive spending, inadequate cash flow management, and an inability to adjust to changing market conditions.

 

[Augusta]

Different factors bring mismanagement of funds. I agree with you that Small business:are prone to be mismanaged because of low profit and these businesses not to be able to employ the services of external auditors. So they find it difficult to monitor the activities in the business which can bring mismanagement of funds
Same can be said of bad Debt: this has caused most businesses to fold up. When they give out this money they cant recover them due to mismanaging the funds.