Managing cash flow is essential to the success of your business. Use strategies such as daily control of income and expenses, eliminating superfluous spending and optimising payments, as well as adopting digital tools such as modern TPAs to facilitate financial management and improve liquidity. Prepare your business for unforeseen events by creating an emergency fund and projecting financial scenarios.

Regardless of the nature and size of your business, controlling its cash flow may not be an easy task. Sometimes it's dozens (if not hundreds or even thousands) of transactions received each day, sometimes it's change and returns.

The truth is that treasury management is a huge challenge for you and your employees, and when carried out inefficiently, could jeopardise the competitiveness of your business.

All these daily challenges you face when managing cash flow are part of the financial management of small businesses and, not infrequently, their inadequate execution is the cause of cash-flow difficulties that can lead to the closure of their business if they are not corrected in time.

What is cash flow and why is it vital for your business?

Given its importance in the financial control of small and medium-sized enterprises (SMEs), good cash flow management is one of the essential elements for your business to succeed. Now it's time to find out exactly what cash flow is.

In practice, the cash flow is the detailed record of all the capital that enters and leaves your company's coffers over a given period (daily, weekly, monthly, annually, etc.), corresponding to all the income and expenditure that your company will have over time, in order to gauge the net change in the cash balance, which will be positive if more money comes in than goes out and vice versa.

As well as giving you a deeper insight into the dynamics of your business, cash flow control is important for..:

• Have comprehensive access to the financial situation of your businessThis allows you to identify superfluous expenses and create more assertive commercial strategies;
• Make more informed strategic decisions;
• Assess the stability and liquidity of the business;
• Identify consumer and payment trends to open the door to new business opportunities.

The main mistakes in cash management

As we have mentioned, analysing cash flow gives us the opportunity to identify more clearly where mistakes are being made that could compromise cash management.

These errors include:

• Uncontrolled cash flow: failure to regularly monitor cash flow postpones the identification and correction of errors;
• The lack of financial planning: without a roadmap setting out financial targets, a forecast of income and expenditure over a given period of time or even the creation of an emergency fund, the business's cash flow and viability are jeopardised;
• The mix between personal and business finance: The source of many errors leading to poor management of an SME is often the mix between personal and business finances, often leading to situations of default;
• The disregard of real costs: setting prices without an accurate accounting of the real operating costs (taxes, profit margin, etc.) can lead to losses accumulating, as well as inefficient stock management;
• Manual management: the absence of digital means of payment and other technologies that help manage cash flow generate confusion and entropy;
• The underestimation of financial indicators: elements such as profit margin or average ticket limit your view of the business's economic performance, making it difficult to identify problems.

Practical strategies to improve cash flow

So that treasury errors are no longer part of your company's day-to-day routine and you get better cash flowIf you have any questions, consider applying these strategies:

• Make daily entries of all expenses and income and try to understand how seasonality affects sales;
• Project future cash inflows and outflowsin order to be able to predict periods of reduced liquidity;
• Optimise your payments using technology;
• Review existing debts and consider renegotiation or the recapitalisation of the company;
• Improve your customers' shopping experience using promotions, discounts and payment methods aligned with your consumption habits;
• Eliminate superfluous expenses, negotiate with suppliers and implement a better collection policy;
• Avoid accumulating products with little output and keep fixed costs as low as possible by renegotiating contracts and looking for cheaper alternatives;
• Create an emergency fund to guard against unforeseen circumstances and guarantee greater business stability.

Digital tools to control income and expenses

In addition to business apps such as Expensify and Moneyboard, which in practice help your business keep track of bank statements, create financial reports, calculate fuel costs automatically, store invoices and receipts and categorise various areas of activity, one of the best The best tools to make your cash flow (and even treasury) management easier is a state-of-the-art payment terminal adapted to your business.

For example, if you have a low turnover and/or operate on a seasonal basis, you can find in the Free TPA with Easy monthly fee not only a way to accept payments with debit and credit cards, contactless, MB WAY, Apple Pay and Google Pay, but also to benefit from a solution:

• no membership fees
• no loyalty period
• no fees and commissions (up to €7,500 monthly invoicing)
• with a monthly fee adjusted to the turnover of your business

For larger businesses, you can find TPA Smart or in the solution Soft the solution you're looking for.

In the case of TPA Android Smart, this gives you the opportunity to start receiving PIN or contactless payments via national, international, contactless, Google Pay, Apple Pay and MB WAY cards, to integrate the application Instalment plan with Unicre, the solution PIXthe functionality DCC - Currency Conversion (which allows its foreign customers to pay in their home currency automatically) and the Tax Free (for greater convenience in VAT refunds) and also enjoy a backoffice for managing functionalities such as remote closing, returns, transaction history, among others..

As for Soft solution, this is an application that turns your Android device into a POS, allowing you to receive payments by QR code, NFC, contactless (Visa or Mastercard), mobile phone number, MB WAY, Google Pay and Apple Pay, as well as sending the receipt by email and making remote returns, customising profiles and accessing a management backoffice..

How to prepare your business for unforeseen financial events

The best way to prepare your business for potential financial contingencies is to bet on prevention.

This includes, for example avoiding unnecessary debts, drawing up projections and simulating scenarios, controlling cash flow and, as we have already emphasised, creating an emergency fund.

To create this fund, you can use a credit (unless interest rates compensate) or use the profit made to put together between 6 and 12 months' worth of fixed expenses, thus being better protected if the business runs into an unforeseen financial problem.