IGCSE, A Level Business Student Forum

[KN] Overtrading happens when a business expands too quickly, putting pressure on its financial resources and leaving it without enough working capital to support its operations.
[APP] For example, a clothing brand might open several new stores at once without having enough to pay rent, suppliers, or staff.
[AN] This leads to cash flow problems making it difficult to cover short-term debts or forcing it to take more loans which can eventually cause serious financial trouble or even business failure.

[KN]: Overtrading means expanding the business too quickly.
[APP]: For example, if a small coffee shop starts opening many branches at the same time to expand the business without enough working capital, it could cause financial problems and business would be unable to pay it's short-term debts.
[AN]: Thus, this would lead to wastage of money, business going into loss which weakens the business's brand image causing the business to fail.

[KN] OT is a business expands too quickly without having enough working capital(finance) to support its operations.
[APP] For instance ,a clothing brand opening several new stores at once may not have enough cash to cover rent inventory or staff salaries.
[AN] This creates cash flow problems which can lead to delayed payments to suppliers which leads to loss of supplier trust nd may not give discounts in future which will increase cost of production.