Small and medium-sized enterprises generate the majority of Brazilian jobs, in addition to representing a large share of GDP. However, they are also the ones that are hardest to grow and those that break most in the first few years of operation. The expansion of the business directly affects your cash flow, which can complicate finances and even break the company.

What is Cash Flow?

What is Cash Flow?

Cash flow is the amount of money a business produces, or burns, monthly. Unlike net income , which measures the economic result, the cash flow measures the financial result, that is, money. The cash flow will serve two purposes, remunerate members and creditors and invest in the expansion of the company .

Generally, cash flow is divided into 3 parts, operating (FCO), financing (FCF) and investment (FCI). A healthy business will show stable or increasing operational cash flows (FCO), the FCI should also be steady or growing.

If the company is increasing profits, the FCO grows, if the debt is increasing, the FCF grows. The FCI, in turn, measures how much the company is investing (or divesting) in its expansion.

How to keep cash flow organized?

How to keep cash flow organized?

Keeping organized cash flow is the main task of every business. If there is not a lot of control of inputs and outputs, the company will probably not have enough resources to operate efficiently.

Ideally, you should build a cash flow statement that is fed daily. In addition, there should be feed of the future statements, to predict the cash balance in the coming periods. The company can not confuse working capital with resources for investments, if it does, it will have operational difficulties.

Another important point is that you can not raise the cash outflows without a consideration at the entrance. Imagine a company that is financing a machine, it will increase the cash outflow, but expects the equipment to increase its gains, thus generating financial equilibrium.

Why does business reform or expansion impact cash flow?

Why does business reform or expansion impact cash flow?

Reforming or expanding a business directly affects cash because it requires investment. The big problem, is that the return of this investment does not come soon after, it takes a while to occur.

Imagine the case of a clothing store that is thinking of remodeling your space to make it more attractive. Let’s say that the company has $ 100,000 for the project, it can choose to make the reform or buy goods. If you buy in goods, the $ 100,000 return quickly to the cashier as soon as the clothes are sold. But if you make the reform, the value will take time to come back.

The big dilemma of the company owner is: retirement can increase profits in the long run but decreases the cash balance in the present. How to decide which is the best option?

The solution, most of the time is to take credit in the market. This process has been facilitated and cheapened by online loan fintechs . In this way, the entrepreneur can ensure the expansion of the business without having to defaults your cashier.

How to take a loan at the wrong time can influence the cash flow?

At the other end is the businessman who, without proper planning, takes a loan at the wrong time, damaging the cashier. Imagine the same as the clothing store, let’s say it’s someone’s first venture. If at the outset, before knowing the business well, the entrepreneur takes a loan to expand it, the risk increases.

If the entrepreneur does not have a very good idea of ​​what he is doing, he may be forcing the company. If the cash effort is greater than the ability to raise profits, the company will break. That is why it is very important to know the business well before taking a loan.

The fintechs can help by providing the right credit for every moment, whether investment or working capital.

How to set up a cash flow for your company?


A cash flow statement can be set up according to the following scheme:

Total Cash Flow for the Month

(+) Cash Flow from Operating Activities

(+) Net Income for the Year

(+) Depreciation

(-) Financial income

(+) Financial Expenses

(+) Cash Flow from Investing Activities

(+) Credit Operations

(+) Sale of Capital Assets (machinery, real estate, improvements, etc.)

(-) Purchase of Capital Assets (machinery, real estate, improvements, etc.)

(+) Cash Flow from Financing Activities

(+) Payment of Capital (new contributions from the partner)

(+) Demand Deposits

(=) Total Cash Flow for the Year

In the above diagram, each of the lines will be accounted for to form one of the cash flows. After adding the 3 flows (FCO, FCI and FCF), we have the total cash flow for the year.

Note that net income is just one line in the cash flow statement. Many entrepreneurs confuse earnings with cash and end up getting complicated. Net profit is only the economic result, while cash, is the financial result, money.

How to expand the business without negatively impacting cash flow?

How to expand the business without negatively impacting cash flow?

As we said in one of the previous topics, an efficient way to expand the business without impacting the cash is credit. In this case, credit would be in the form of online loan, which is simple, fast and cheaper.

If the entrepreneur can use foreign money to expand / reform his business, he will put less pressure on the cashier. As the return on investment is long term, it can take out the loan, also with longer terms. Ideally, loan terms should be well aligned with the payback period of the desired project.



The decision to take credit is part of the day to day business. It may even be that there are some small businesses that run on equity only, but they will always be small. It is impossible to make a business grow at satisfactory rates without leveraging it with loans. In this sense, fintechs have come to revolutionize the market, with simple and cheap solutions to entrepreneurs.



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