What are the main mistakes when making cash flow?

What are the main mistakes when making cash flow?

We have separated 8 mistakes that business owners make in relation to cash flow. Find out what they are!

Have a lack of organization

Organization is essential to have an efficient cash flow. The lack of it makes it difficult to analyze the balance and debts, as well as identify the payments to be made.

Without organization, it is also more difficult to make projections for upcoming entries and exits and think about financial planning for the business. This way, you lose control of your accounts, which is harmful when making investments and investments.

To organize your cash flow, you must write down all the company’s inflows and outflows, because this brings clarity and precision to your decisions, as well as making it easier to identify bottlenecks and areas for improvement in your cash flow.

Do not update information

Updating your business’s inputs and outputs is essential to avoid errors in inventory management , calculations of monthly balances and other calculations important to the company’s financial health, such as contribution margin and profit margin .

Not having an updated cash flow means you lose control over this element that is so important to your business, especially if more employees have access to it. After all, an unupdated document can lead to process errors and wrong decisions, based on data that does not correspond to the reality of your business.

Mix personal accounts with company accounts

Mixing personal accounts with company accounts is dangerous, because it increases the chances of confusing income.

It is necessary to separate personal finances from company finances to be clear about the amount available for your personal expenses and business expenses. Otherwise, you run the risk of spending more on one of these fronts, harming the other.

To avoid making this mistake, you must have an expense table for your company and another for your personal finances. Furthermore, it is recommended to open a corporate account for your business at the bank, separate from your individual account. You choose whether to do this at the same institution or at different banks, depending on the rates of each one.

Maybe you’re having a problem with your personal finances, but not the company’s. This separation helps you identify these issues independently.

Likewise, have an emergency reserve for the business and another for you — an individual. One last tip to avoid mixing accounts is to establish a salary for yourself every month and transfer it from the company account to your personal one.

Making wrong entries

Making mistakes when entering values ​​causes calculation errors that, if not revised, end up harming business planning and profits . That is, if they are not identified quickly, these erroneous entries can cause great confusion in finances and take time to be discovered.

Therefore, pay close attention when including your inflows and outflows in the cash flow control document and always review the values.

Forget categories

Not categorizing accounts makes it very difficult to identify where the money is going and what the business’s main sources of income are.

For example, supposing you record some values ​​in your cash flow in a spreadsheet line, without identifying what each one corresponds to and just adding up all the numbers.

Then, you notice that there was a significant increase in the final value compared to the previous month. But, since you didn’t categorize your expenses, you have no way of knowing what caused your expenses to increase.

Consider entries that did not happen

When calculating your cash flow, do not count sales amounts and other entries that are not yet in your account. After all, unforeseen events happen and these values ​​may not materialize in the period considered.

Although it is important to have a certain predictability of sales and expenses to make better planning, it is dangerous to include amounts in your cash flow that are not yet concrete.

This can lead to calculation errors, as well as a false feeling that you have income that you don’t yet have, running the risk of spending the money before receiving it.

Do not specify inputs and outputs

As important as categorizing the elements of cash flow and recording all inflows and outflows is specifying expenses and receipts.

Therefore, avoid using generic terms, because you may not remember exactly what they refer to when you look at the cash flow again.

To make it easier to understand, create standards, especially if other employees have access to the cash flow. This aligns everyone on the team and makes cash flow more accessible.

Not having a financial plan for the business

Even if your cash flow is organized, not having financial planning for the business can compromise your finances in the medium and long term.

Without planning, it is difficult to have sales predictability, think about expanding the company and hiring new employees.

Therefore, alongside cash flow management, also carry out financial planning for the coming months. In fact, analyzing your flow can help a lot in this regard, so that you can evaluate how your inputs and outputs are progressing over time.


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