Cash flow Learn More

To know how current and future revenue and expenses are going, you should use a type of control called cash flow.

What is cash flow?

In a simple way, we can say that cash flow is an instrument that the entrepreneur uses to monitor the financial situation of his company.

To make yours, it is enough to create a report with information about all the movement of money spent or received by your company in a certain period of time.

Frequently asked questions

What should I record in cash flow?

All forecasts: both forecasts of fixed expenses such as rent, electricity and water bills, as well as forecasts of future receipts, for example, installments receivable, planned sales, among others;

All receipts (sales): it′s not just sales. For example, there may be receipt of income from applications; All payments (purchases): it′s not just about purchases. For example, there may be payment of bank charges and payment of taxes.

Why is it important to maintain a cash flow?

It is with the help of this report that you can predict some financial situations and plan in an organized way how to solve problems, reduce expenses, unclog inventories, make investments, negotiate term extension with a supplier, apply for loans and other solutions so that possible financial difficulties are minimized or avoided.

What is the optimal period for doing this analysis?

Your analysis process can be daily, weekly or monthly. It is recommended, however, that the existence of the final balance be confirmed daily.

Negative balances should be analyzed to find out the causes (late receipts, high delinquency rate, drop in sales, too long receipt term and short payment term, etc.).

High positive balances also suggest the need to improve the financial organization, as the company may be no longer receive interest on applications or negotiate better payment terms with suppliers.