Cash flow: Control your business money
Moloni
The best tips for your business.
Content designed to support entrepreneurs and businesses in managing, generating revenue and growing their business.
Key takeaways
- Critical difference: Cash flow focuses on the money available immediately, unlike accounting profit.
- Timing management: It is essential to align customer payment terms with supplier payment deadlines.
- Role of Moloni ON: Certified software helps predict financial flows by tracking unpaid invoices.
- Cash shortage prevention: Maintaining positive cash flow ensures your company can meet obligations such as VAT and salaries.
- Data analysis: The SAF-T(PT) file and invoicing reports are the basis for a reliable treasury analysis.
What is cash flow and why should it be your priority?
Cash flow is the movement of money in and out of your business over a given period. Unlike profit, which is an accounting performance metric, cash flow tells you exactly how much money you have available “in hand” to pay bills today.
For business owners, understanding this is the difference between survival and closure. You may have high invoicing levels, but if clients only pay in 90 days and you must pay VAT to the Tax Authority next month, you will face a liquidity problem.
How can you calculate cash flow in a simple way?
The basic calculation is straightforward: Receipts - Payments = Cash Flow
To maintain real control, you should separate activities into categories:
1. Operating: day-to-day business (sales and fixed expenses.)
2. Investing: purchase of equipment or software.
3. Financing: loans or capital injections.
In Moloni ON, you can access reports showing what has been settled and what is still outstanding, making this calculation easier without complex spreadsheets.
What is the difference between profit and cash flow?
This is the most common mistake among young entrepreneurs. Profit appears in your income statement when you issue an invoice. However, that money may not yet be in your bank account.
Cash flow only accounts for money when it actually enters your account. You can have a highly profitable business “on paper” but still fail due to lack of cash available to pay suppliers or employees.
How does Moloni ON helps optimize your treasury?
Moloni ON is certified invoicing software by the Portuguese Tax Authority (AT) that centralizes all the information you need to manage liquidity. You can automate payment reminders for clients who forget invoices, reducing average collection time.
Additionally, by issuing transport documents and invoices efficiently, you speed up the financial cycle. Having real-time access to this data on your screen or phone allows you to make quick decisions before a cash shortage happens.
What strategies can you use to improve your cash flow?
If cash is constantly “tight”, try these tactics:
- Accelerate payments: offer small discounts for immediate payment.
- Negotiate with suppliers: extend payment terms without extra costs.
- Control stock: unsold stock is frozen money that is not generating cash flow.
- Monitor VAT: Use your software to know exactly how much tax you will need to pay each quarter or month.
Why is negative cash flow dangerous?
Negative cash flow means you are spending more money than you are receiving during a certain period. If this is occasional (such as a planned investment), it is fine. If it is recurring, you will need to take on debt or use personal reserves.
Regular monitoring through your invoicing software backend allows you to identify seasonal patterns and prepare your business for lower-revenue months in Portugal.