Cash flow is like the financial heart of a startup: it needs to beat strongly and consistently to ensure your business stays healthy and ready to grow. Knowing how to manage cash flow is essential for keeping control over the money coming in and out of the company, avoiding surprises and problems that can undermine your success. Let’s explore, in a simple and practical way, how you can do this in your startup and ensure its prosperity.
Monitor your startup’s inflows and outflows
One of the first steps to keep your cash flow under control is to constantly monitor the money coming in and going out of the company. This may seem obvious, but believe me, many startups end up in trouble because they fail to record small daily expenses and revenues.
Keeping a detailed record of all inflows and outflows helps you know exactly how much cash you have at any given time. More than that, this practice provides a clear and accurate overview of your startup’s financial health.
Forecast fixed and variable expenses
A common mistake among entrepreneurs is not planning expenses properly. Knowing how to distinguish between fixed and variable expenses is essential for making more accurate financial forecasts. Fixed expenses are those you have every month, regardless of how much the company earns, such as rent, salaries, and utility bills. Variable expenses, like marketing and maintenance, can change according to business needs.
When you make a realistic forecast of expenses, it becomes much easier to adjust the budget as needed. If money is tight one month, you might hold back on marketing investments, for example, but you can’t skip paying rent. This is why understanding what is fixed and what is variable makes all the difference.
Create a reserve fund for your startup
Another key point for a startup that wants to survive and grow is to have a reserve fund—essentially a ‘savings account’ for the company, intended to cover unforeseen expenses and ensure the business continues operating even in tough times. Imagine if, suddenly, one of your biggest clients delays payment or an essential piece of equipment breaks down? Having money set aside ensures that surprises don’t leave you in the red.
Here’s a tip: start small. Even if you can only set aside a small amount at first, the important thing is to build the habit. Over time, the fund will grow, and you’ll have greater financial security to face any setbacks.
Use financial management tools
Don’t try to manage cash flow with a notebook or scattered spreadsheets. There are many financial management tools that can automate the process and make your life much easier. Financial management software helps control cash flow automatically, makes it easier to visualize financial movements, and even provides insights to help you make better-informed decisions.
Tools like QuickBooks, ContaAzul, and ZeroPaper are just a few examples of systems that can make a big difference in a startup’s daily operations. Besides being accessible, they give you total control over your finances, avoiding the chaos of trying to do everything manually.
Review cash flow regularly
Cash flow isn’t something you look at once and then forget. Regular reviews are essential to ensure you’re on the right track and to identify any adjustments that need to be made. They can be done weekly, biweekly, or monthly, depending on the volume of transactions in your business.
Constant reviews also help identify trends. For example, you might notice that during a certain period of the month, your expenses increase more than expected or that certain clients always delay payments. These details are invaluable and help adjust your financial strategies to maintain positive cash flow.
Well-managed cash flow is the key to your startup’s success
Well-managed cash flow is undoubtedly one of the secrets to a startup’s success. Start applying these tips as soon as possible and watch how your company’s financial health improves.
The process may seem laborious at first, but over time it will become a natural part of your routine. The benefits are many: more control, less stress, and a startup ready to grow in a healthy and sustainable way.
