Intro

Managing cash flow is fundamental to the financial health of all companies, but it is even more critical for small and medium-sized companies (SMEs) that face the most challenges in the competitive Brazilian market. An optimized cash flow not only ensures that your operation is running in a healthy way, it also facilitates the sustainable growth of your business. In this article you will learn three techniques that will help you optimize your company's cash flow in an efficient and practical way to achieve control of your finances.

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Efficient Cash Flow: Boost your company's financial health (and sleep better!)

According to Sebrae data from October 2023, Brazil has more than 22 million small businesses, and micro and small companies account for about 99% of all companies that exist in the country, with 55% of the jobs with a formal contract and representing almost 30% of the Brazilian Gross Domestic Product (GDP). The importance of SMEs to the economy is clear, but the survival scenario is still alarming. On average, 3 out of 10 companies close their activities in their first 5 years of operation. There are many challenges for small entrepreneurs, but the main reasons for the company's mortality rate to be so high are inefficient cash flow management and, of course, the difficulty of accessing credit.

Maintaining a business with a healthy cashier and more active business management requires strategic planning. Among the opportunities and alternatives, having a structured cash flow is essential for the control and planning of the company's financial future. A structured cash flow consists of recording all cash inflows and outflows in a given period, with clear predictability of outflows and the consequent need for capital to assume the mismatch between payments and expected receipts. The lack of cash flow planning leads companies not to pay suppliers, rents and even payroll, which can generate high interest costs, and even legal problems. When that reality materializes, the only way out is to close the deal.

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However, you don't have to get there. There are proven ways to organize yourself better and ensure the sustainability of your company for a long time.

‍1. Cash flow projection

Cash flow should provide a clear view of how your company's finances are doing. To perform a projection, you can follow the following steps:

• Definition of the observation period: Start by defining a period that will be observed and how the money will be allocated within this time.

• List expected revenues: The next step is to document all the expected revenues in the defined period, so you will have control of all the entries. This includes sales, receipts for services provided or products sold, tax refunds, royalties, and product licensing.

• Enumeration of all expenses: Record all forecasted expenses. This includes fixed expenses such as rent and salaries, as well as variable or sporadic costs.

• Expected cash flow preparation: With the income and expenses properly mapped, prepare the cash flow projected in a document. This document will be the basis for financial planning, allowing you to create varied scenarios and prepare for possible unforeseen events in your company during this period.

2. Efficient inventory management

Regularly evaluate which products have the best turnover among your customers and adjust the purchase orders from your suppliers according to the demand for them. Thinking about a smarter inventory for your company, some tips that can help you in this process are:

• Implement a “Just-in-Time” (JIT) based system: This method involves buying new merchandise strategically, reducing the money allocated to an inventory that can go far beyond your expected sales, so as not to be necessary. This can help you minimize storage costs.

• Regular inventory analysis and auditing: Regularly evaluating the performance of your company's inventory can help you identify products that haven't sold. It is a good strategy to start discontinuing the purchase of an inventory that is underperforming in the number of sales, and to start focusing on high-turnover products. Focus on accurate records in order to detect problems such as theft or deterioration, for example, products close to maturity and that may negatively affect your cash flow if they are not sold.

• Negotiating better deadlines with suppliers: Better payment times in volume will help you to have a better allocated cash flow. By better aligning payment deadlines with sales cycles, your company can better manage available working capital and use a strategy more efficiently.

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3. Deadline negotiations with suppliers

A well-designed strategy is to better negotiate payment terms with your suppliers in order to free up capital that would otherwise be fixed at the time of purchase. By negotiating longer payment deadlines, you can more intentionally align purchase payment dates with the time to receive payment from your customers, thereby reducing the risk of cash flow deficits.

Having a flexible payment schedule will make it easier to plan and manage your business finances without compromising your company's financial health. This process may seem difficult with traditional banks that will charge you high interest rates and several fine letters, but it's an easy, fast, and simple possibility when you use CrediPay.

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Pay in time with CrediPay

Using a PIX installment payment service can transform how you manage your purchases. This solution allows you to purchase merchandise from suppliers with the ease of paying for up to 90 days.. This not only improves your relationship with your suppliers, but it also keeps your cash available longer if you face other critical operations that need to be carried out.

So, if you haven't considered the PIX in the future for your company, now is the time to explore this innovation that can offer significant competitive advantages in the market. We, from CrediPay, we are committed to helping you transform your financial health and achieve your results. Talk to your supplier to offer CrediPay!