Financing, apart from being an instrument to expand and develop new projects, can help a company combat many problems, such as stagnation or bankruptcy.

According to the EDN 2021 report, developed by INEGI, in 2021 there were more companies that went bankrupt (1,583,930) than were born (1,187,170). For entrepreneurs, this number may seem daunting. However, knowing the existing financing methods and their benefits can be a great solution to combat problems such as negative cash flow.


What is cash flow?

Cash flow is one of those indicators that SMEs must measure and take into account. However, what is it about? In general terms, it refers to the input and output (income and expenses) of capital, during a certain period.

This serves to clarify the financial outlook of a company and thus be able to analyze the immediate, medium and long-term future of the business.

This indicator can result in a positive or negative number.


Positive flow

The flow is positive when the company has sufficient liquidity to cover essential needs, such as the payment of services, raw materials, payroll and others.

In addition to this, the company has a positive balance in its capital that it can invest in the growth of the business.


Negative flow

Conversely, the flow is negative when the output of resources is not only greater, but also faster than the input of income.

This phenomenon indicates to the company that its assets are declining. At the end of the month, the entrepreneur finds that more capital is coming out of his business than coming in. If this continues, the company exhausts its resources and ends up bankrupt.


Causes of Negative Flow

Although they can be many and varied, usually the main reasons are:

  • Wrong pricing: mispricing is something that has a direct impact on the business. That is why everything that the company invests must be considered and how to set prices that allow it to be recovered.
  • Deficient or no control of expenses: each expense, however minimal, must be considered. Small outflows of resources can be significant in the end and affect the business. Keeping track allows you to set goals, solve problems on time, and make appropriate adjustments.
  • Lack of planning: not being clear about the direction of the business results in bad investments and bad results. Knowing what is expected to achieve allows focused strategies and efforts to achieve goals, avoiding leaving loose ends.


Online credit as a solution

Faced with problems of stagnation or lack of capital, a company can see that its operations are hampered and the paths go directly towards bankruptcy. However, the injection of capital can be a great way to reinvigorate the business and revive its growth.

Online FINANCING are currently good alternatives for businesses that are looking to expand and that, because they are new, may precisely have problems with their cash flow.

To promote financing for SMEs and boost their growth, Pymes Capital has developed online credit solutions that allow small and medium-sized businesses to request loans online in a simple and efficient way. Get to know Pymes Capital and find the financing your business needs to get a new start.