How to control your company's cash flow?


When we talk about financial control of any business, one of the first concepts that needs to be understood and applied is cash flow . This is because, in addition to being an extra useful tool for efficient business management, it also directly influences decision making that can determine the direction of the enterprise. see for more notes

As we have already mentioned in our blog , the success of a company, be it small, medium or large, depends entirely on the planning and predictability of its managers. Thinking about a well-structured mathematics that encompasses all the entry and exit of money from the company is essential.

In this article you will understand what the concept of cash flow is, why it is so important, what are the main mistakes made by entrepreneurs, and especially how to control and manage the cash flow of your business in the right way. Keep reading this content and get all your questions answered!

What is Cash Flow?

What is Cash Flow?

Cash flow represents the entire movement of money in and out of a business. Therefore, to apply it, you need to record in detail all the gains and expenses that your business has been having.

Through daily, weekly or monthly surveys of this information, which also include available account balances and short-term applications, you create a solid and reasoned database to make the decisions that will guide your business from So.

In addition, it is possible to take a more critical and accurate look at the financial momentum by which your business is going.

What are the most common mistakes when managing your company’s Cash Flow?

What are the most common mistakes when managing your company

Although it is a fundamental tool for the sustainability of any company, many entrepreneurs end up applying the cash flow in the wrong way. Whether due to lack of experience or lack of knowledge, this can impact the results and financial health of that business.

See below for the most common errors:


  • Mixing Personal Expenses with Company Expenses: When the owner or partners mix personal finances with company finances, it is not possible to establish with certainty which are the input and output values ​​of each, causing a disorganization of the flow Of box;
  • Consider values ​​that have not yet been received: When you consider values ​​that are not actually available for use, such as pre-dated or credited checks, you end up harming your cash flow control;
  • Do not organize by categories: you must be aware of the main expenses of the company. Understanding where your money is going helps you control it and make cuts when necessary;
  • Stop updating daily: Outdated cash flow is useless. Including the new releases in the system is a practice that should be done every day and be part of the business routine.


5 Tips to Organize, Track and Maintain Your Cash Flow

5 Tips to Organize, Track and Maintain Your Cash Flow

More important than understanding the amount that comes in or out of your company, cash flow is a tool that helps you design the need for working capital in the future .

Nowadays, there are many management softwares on the market that help you with this account. But even so, it is important to keep in mind some attitudes that should come from those in charge of the company. Check out our guidelines:

Tip01: Monitor cash flow every day

As we talked about in the previous topic, keeping outdated cash flow is one of the worst mistakes you can make. Therefore, it is very important to monitor and update every day.

If it is not possible to do this daily, it is up to the administrator, who already knows the finances and the routine of the business, to determine a frequency for this (per week, per fortnight or per month).

Tip2: Control accounts payable and receivable

In addition to the money that has already come in or out of the box, you also need to chart a forecast of accounts payable and accounts receivable. This will make it easier to set up your cash flow.

Here we can also include the question of the categorization of revenue and expenditure. Administrative, productive or marketing costs? Revenues that came from the main activity of the company or from parallel investments? Understanding where and where money is going is essential.

Tip03: Make a forecast for the short and long term

With the implementation of the cash flow it is possible to stipulate a short or long term projection. From there, the entrepreneur can evaluate possible scenarios and prepare for the adversities that may arise along the way.

At the end of the period, compare what was planned with what actually happened, analyze the unexpected expenses, and try to avoid them later.

Tip04: Have a stock planning

Planning your inventory helps you understand the quantity and timing of a new order. This is important since the stock represents an immobilized capital, that is, it does not generate revenue or interest.

By making the correct forecast of your inventory, you can invest money that would stand for a while at other more advantageous opportunities.

Tip05: Make an assessment of your working capital

Do you know the relationship between cash flow and working capital ? Both are fully connected and influence each other.

Tracking cash flow as you measure working capital allows you to check if the return on your sales is in line with what was planned. The larger the cash flow, the lower your company’s working capital needs.


Now that you know the right way to manage your cash flow, it’s time to put your hand in the dough!


So, did you like this article? We at BizCapital are here to help business owners who want to see their business take off! Keep an eye on our blog and check out other tips on the world of entrepreneurship.


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