Cash flow for small business, from notebook to automation.

What is cash flow?

It is the list, in date order, of all the money that comes into and goes out of the business. Each line has four pieces of information: the date, the description, the amount and whether it is money in or out. Adding the inflows and subtracting the outflows gives you each day's balance.

A useful cash flow has two parts:

• Actual: what really came in and went out, checked against the bank statement and the store's cash count.
• Forecast: what will come in and go out in the coming weeks, such as rent, payroll, supplier bills, installments to receive and card machine payouts.

The actual part shows where the money went. The forecast warns you ahead of time about the week when the balance will run low, early enough to negotiate a due date, hold off on a purchase or collect from someone who owes you.

"Cash" here includes all the money the business has available: the register drawer, the bank account and the balance held by the card machine company. If the money is in one of those places, it goes into the record.

The first month is for learning where the money goes. From the second month on, the forecast gets more accurate, because you already know which bills repeat and when each sales channel pays out.

How do you build a cash flow?

Follow this order the first time. It takes an afternoon and then becomes a few minutes a day.

1. Gather what you have. The last two months of bank statements, fixed bills, open supplier invoices, sales on credit and the card machine report.
2. Create categories. Few and clear. Inflows: cash sales, Pix, debit card, credit card, other. Outflows: suppliers, rent, payroll and payroll taxes, taxes, utilities, bank and card fees, owner withdrawals, other.
3. Enter the actuals. Each transaction on its own line, with date, category and amount.
4. Enter the forecast. Everything that already has a date in the next four to eight weeks.
5. Work out the daily balance. Yesterday's balance, plus today's inflows, minus today's outflows.
6. Find the tightest week. It is the day when the forecast balance is lowest. Decide now what to do about it.
7. Check every week. Compare the actuals with the bank statement. Bank reconciliation shows whether anything was left out.

One rule prevents half the mistakes: owner withdrawals go in as an outflow with their own category. When they get mixed into other expenses, the cash flow stops showing how much the business really generates.

How is cash flow different from profit?

Profit is what is left from a period's sales after taking out that period's costs and expenses. Cash flow is the date when money actually comes in and goes out. The two can give very different results in the same month.

A common example: a shop sells well in November, much of it on credit cards in installments. On paper, November was profitable. But the installments come in over the following months, while the supplier and payroll are due now. The shop made a profit and can still run out of money to pay December's bills.

That is why the two views go together:

The money a business needs to keep on hand to pay its bills while it waits to get paid is called working capital. The cash flow forecast shows how much of it you need.

How do you make a simple cash flow in Excel?

A template that fits any small business uses a single tab with two parts side by side.

Entries, in columns A to F

One row per transaction, with these columns:

Daily summary, in columns H to K

One row per day, with the date in column H. Excel's SUMIF function adds the values in a range that meet a condition, and here the condition is the date. In column I, the formula =SUMIF(A:A,H2,D:D) returns the total coming in on the day in cell H2. In column J, =SUMIF(A:A,H2,E:E) returns the total going out.

The day's balance, in column K, is the previous day's balance plus inflows minus outflows. On row 3 the formula is =K2+I3-J3, copied down. On row 2, type in the balance you have today in the bank and the register.

To build the forecast, copy your fixed bills into the coming weeks, each on its date, and mark them "Forecast". When a bill is paid, switch it to "Actual" and adjust the amount if it changed.

Summary example

With made-up figures, just to show the logic:

On Wednesday the balance goes negative because rent and a supplier are due the same day. Seeing it ahead of time, all it takes is moving one of the two dates.

Two practical tips:

• Highlight days with a negative forecast balance in red. That way the problem is visible right away.
• Always use the same list of categories. If everyone types them differently, the totals by category won't add up.

The same template works in Google Sheets, which also has the SUMIF function.

How do you do cash flow as a sole trader (MEI)?

An MEI (microempreendedor individual) is Brazil's simplest way for a sole trader to have a business tax ID (CNPJ). For an MEI, the cash flow can be even shorter, with three precautions:

• A separate account. Use an account just for the business, even at a digital bank. Mixing it with your personal account is the most common reason an MEI can't tell whether they are making money.
• A fixed owner's pay. Set an amount you take each month for your personal life and record it as an outflow. What is left stays in the business for purchases and surprises.
• Business bills in the forecast. The MEI's monthly tax payment, software and app subscriptions, restocking supplies. Each with a date.

At first, a notebook or a spreadsheet on your phone is enough. What matters is writing things down the same day. If you wait until the end of the month, you forget the small expenses, and those are the ones that add up.

If your business sells services, like a salon, an auto shop or an office, also record work that is done but not yet paid. That amount goes into the forecast and shows who needs a reminder. The article on how to collect from a late-paying customer has ready-made messages for that.

How do you do cash flow for a restaurant?

Restaurants, bakeries, bars and snack bars have their own money rhythm: they buy supplies almost every day and get paid through several channels, each on its own schedule. The cash flow needs to show that.

• Split inflows by channel. Cash, Pix, debit, credit, meal vouchers and each delivery app. Each channel has a payout date and a fee.
• Record a sale on the day the money arrives. Today's credit card sale goes into the forecast on the payout date, with the fee already taken out.
• Group supply purchases. Produce, meat, drinks, bread, disposables. That way you see which group grew without sales growing with it.
• Close out the register every day. Count the drawer, check it against the point-of-sale system and record any difference in its own category.
• Look at the week, not just the month. In a restaurant, the squeeze usually shows up in the week when payroll, rent and a big supplier are all due together.
• Compare purchases with sales every week. If supply spending goes up and revenue doesn't keep pace, look at waste, supplier prices and each dish's recipe costing.

If you already use a point-of-sale system, it probably exports a report by payment method. That report can feed the cash flow without typing. See what else can be automated for restaurants, bakeries and bars.

For a street shop, the logic is similar. The difference is usually in merchandise purchases, which are larger and less frequent, and in store credit or installment sales, which push the inflow into the following months.

Why does cash get tight even when sales are good?

Almost always because of timing. Money from sales comes in later, and bills are due sooner. The most common reasons:

• installment sales on card or store credit, which come in bit by bit;
• a large stock purchase paid upfront or on short terms;
• a customer who is late paying for work already done;
• card machine and app fees nobody tracks;
• owner withdrawals above what the business generates.

In its 2020 business survival survey (Sobrevivência de Empresas), based on federal tax data and interviews, Sebrae, Brazil's small business support agency, found that 22% of respondents named lack of working capital as the main reason the business closed.

A cash flow forecast shows that squeeze weeks ahead. With that warning you can act: ask a supplier for longer terms, offer a discount for paying by Pix, postpone a purchase that can wait, get an advance on card receivables knowing what it costs, or collect from late payers.

Can you automate your cash flow?

Yes, and most of the manual work goes away. Automation usually follows this order:

1. A statement that comes in on its own. The bank lets you download the statement as a file (OFX or CSV), and the spreadsheet or system imports it without typing. Reconciliation flags only what didn't match.
2. Sales that come in on their own. The point-of-sale and card machine reports become entries by payment method, on the payout date.
3. Invoices and receipts read by AI. You send a photo of the supplier's bill or invoice by WhatsApp or email, and AI reads the date, amount and supplier and creates the forecast line. Someone checks it before confirming.
4. Alerts and reports. A warning arrives when any week's forecast balance drops below a limit you set. Every Monday, a summary of last week's actuals and the coming weeks' forecast.

The result is a self-filling spreadsheet that the owner just reads and acts on. The summary can arrive as an automatic weekly report on WhatsApp or by email. More examples of AI in this area are in AI in finance, and the spreadsheet step by step is in how to automate a spreadsheet.

At Lotaloja, this work starts with a full business analysis, which costs R$ 199 and shows which of these steps make sense for your business and in what order. Third-party software licenses, when needed, are billed separately.

Which mistakes do the most damage to cash control?

The most frequent ones are simple to fix:

• Mixing personal and business accounts. The balance stops telling you anything about the business.
• Recording only sales. Without the outflows, especially the small ones, the spreadsheet balance always sits above the real one.
• Forgetting fees. Card machine, app and bank fees go out every month and need their own category.
• No forecast. Actuals alone only show the past. The forecast shows the problem in time.
• Checking now and then. A fixed day each week keeps errors from piling up.

If you want help setting up cash control for your business and knowing what to automate first, take the free 3-minute assessment or see Lotaloja's plans.