Cash flow is a determining indicator for the financial stability of companies.

To identify whether it is positive or negative, a financial report must be generated that specifies the company’s income and expenses in a specific period. If when comparing these values, income is higher than expenses, we are talking about a positive net flow.

However, the fact that this indicator is negative does not imply poor management in all cases, especially if this situation occurs in the first months of operation or if the company has had to face a crisis such as the one described above. occurred a few years ago due to the COVID-19 pandemic.


Measures to correct negative cash flow

It is important to know that a negative financial flow can be corrected, ideally, by increasing profits and reducing expenses. However, when, for some reason, this is not possible, there are a number of actions that can be taken to regain financial balance.


1. Improve accounts receivable management

Even when a company has a high level of sales or sales that exceed its expenses, significant time lags can occur between the time the sale occurs and the date they receive payments. Therefore, a first strategy is to improve accounts receivable management, agreeing with clients on payment dates that allow the company to have liquidity to meet financial commitments in a timely manner.


2. Delay accounts payable

This strategy consists of deferring the payment of outstanding bills. In this sense, the negotiation will be about the periodicity of payment, with the aim of restructuring them.

In this way, it may be ideal to ensure that the number of payments is greater, but the amounts are smaller, and thus maintain a certain level of liquidity during the year.


3. Avoid inventory accumulation

We refer to those that are not selling. A good way to avoid accumulating inventory that will not produce profits is to offer promotions and discounts in order to accelerate sales.

The cost of storing or transporting merchandise or products that were not sold must be kept in mind, compared to the alternative of significantly lowering prices.


4. Use external financing sources

External financing sources are considered those that are outside the organization, such as banking institutions or other credit grantors.

Some of them offer facilities such as online loans, allowing companies to complete growth projects in a short time or get out of a period with negative cash flows and, in this way, recover their financial health.


Online loans: a great tool to correct cash flow

At Pymes Capital, we believe in the potential and contribution that small and medium-sized businesses represent to the country’s economy. For this reason, we offer customized financing solutions with a high approval rate, which will allow them to achieve their business goals in less time or face complex scenarios such as the need to correct the financial flow.

Online financing through MCA financing (Merchant Cash Advance) are an excellent alternative, as they consist of a cash advance that applicant companies pay with a percentage of their future sales.

Contact us and boost the development of your company in a few steps.