Negative cash flow describes a situation in which a firm spends more cash than it takes in. This is a relatively common situation in the first few months or years of a business, when it is still ramping up production and searching for customers. During this period, negative cash flow is supported by debt or equity funding. If a business experiences negative cash flow over the long term, it will likely fail or be sold off, unless investors are willing to inject more money into it. This condition arises when a firm’s business plan is flawed, it is poorly managed, or fraud is draining away cash.