What does CLEC mean in ACCOUNTING

Current liabilities are obligations that are expected to be paid off within one year or within an operating cycle, whichever is longer. Examples include accounts payable, wages and salaries, short-term loans and short-term note payable.

When current liabilities exceed cash, it means that a company has more liabilities than cash on hand to pay them off. This can lead to serious liquidity issues and cause major problems for a business if not addressed promptly.

The most common cause is when a business spends more than what they bring in through sales or through cash reserves. If expenses increase while revenues remain stagnant, it can cause a situation where current liabilities exceed available cash.

Companies should first look at ways to cut their expenses in order to reduce their current liabilities while also increasing revenue through new sales strategies or promotional activities. They may also need to seek financial assistance such as taking out loans or raising extra capital from investors in order to cover the shortfall.

Businesses should monitor their finances closely by regularly tracking how much money comes in and how much goes out each month. By doing so, they'll be able to spot any potential issues early on and develop strategies for reducing costs before it becomes an issue.