The business environment is getting more and more dynamic. Innovative ideas stimulate new businesses emergence and, therefore, new small companies. However, to thrive through this competitive market, and still have the chance to grow healthy with less barriers, it is important to be alert not only to the market itself, but to the company’s management. A good financial control, for instance, gives the entrepreneur more certainty, and still allows knowing their financial situation, and their capacity to invest and grow. To assist the entrepreneur, an essential instrument for all companies is the cash flow control.

The Cash Flow is a financial instrument that monitors the cash inflows and outflows through the time, that is, how much the company has to pay and receive and when the transaction will be held. It is very important to clarify that the transactions are registered according to the amount inflow and outflow effective date (cash basis), differently from the economic result view (accrual basis). That way, the cash flow is useful for both register the transactions already occurred and to provision the known ones that will still occur. It is an excellent instrument to predict the future cash flow balance and monitor if there will be a lack or excess of cash. By having this view in advance, the entrepreneur has more time to take corrective actions. With the lack of resources, it is essential to know how much and when it will be lacking, allowing to anticipate and seek efficient ways to obtain the necessary complement, whether renegotiating, anticipating receivables or seeking for financing solutions.

The cash flow control is also a strategic instrument, given that it allows not only to verify the potential lack of cash, but also its excess. Thereby, the entrepreneur is able to plan what to do with this exceeding resource, planning, for instance, how to invest it, whether in financial investments for reserve, or even on machines, equipment, new technologies, product development or market share expansion, with a new branch opening.

In order to have an effective control, the company must adopt financial good practices, that will be the base for cash flow control, such as an efficient control of payable and receivable accounts and their due dates, stock and materials movements, control of tax and labor obligations and as well as financing already acquired. All these controls must be followed by its respective documents, such as contracts, invoices and bill accounts, and be recorded in advance on a software or similar registration system. By having this general inflow and outflow cash control, it is possible to have the reliable and real time control of account balances and resource availability. It is very important to maintain this control constant and periodic, that must be followed according to the drawn strategy in order to be effective and reflects the company’s reality.

To assist on this control, the entrepreneur can use different financial tools. The spreadsheets are the most popular and accessible instrument of control, it is widely used by companies, and in most cases, it is the starting point for this cash flow control.  However, given the internet and technology evolution, currently there are many systems on the market that do this control in a faster, automated and integrated way, they are also safer, given that the information is stored on cloud or dedicated servers, decreasing significantly the data loss risk. The system also allows more flexibility to analyze and visualize the information, the inflows and outflows and the graphics, what facilitates the entrepreneur’s decision making. Besides that, most web systems used to control cash flow are already widely accessible in terms of cost for small companies, what makes the decision to implement them easier. However, before implementing any kind of system or control, it is essential to plan and organize how it will occur, in order to achieve the expected results.

What about you, do you already have a cash flow control implemented? Do you need help planning, organizing and implementing a cash flow control system? Talk to a Dutra Business Management consultant to get more information!


By Mateus Kunzler