Cash Flow: bridge or barrier?

Curiosity, creativity, and resilience are some of the skills that led an entrepreneur finding opportunities to propose services, products, and new ways of doing things.

This has allowed them, throughout history, with their minds way ahead of their times, to originate opportunities by daring to do things their own way, just like Henry Ford with the automobile, Wald Disney with his imagination, or Larry Page with his Google search engine.

No matter the kind of enterprise, set of operations or kind of product or service, all visionaries share the need to develop skills for financial resources management, as eventually all decisions translate to the economic field.

Some of the most relevant areas for finances are centered in the ability to gain, manage, and handle financial resources skillfully, to fulfill the scope of the entrepreneurship by giving value to the customers.

Money is represented in the legal tender used to conduct the business’ economic operations and it is managed through cash flow, this financial statement clearly presents the date and concept in the programming of entries and incomes of money.

With this reflection, we infer there is no healthy business without an optimal management of its finances and for this, the entrepreneur has two ways to relate to the efficient use of cash flow in the business: they can perceive it as a barrier that does not allow them to grow, or as an ally to create bridges with the participants in their supply chain to generate growing and productivity as the entrepreneurship consolidates.

It is essential that the entrepreneur conceives the management of financial resources as the scaffolding that will allow them to bring the business to higher dimensions with structure, strength, and stability.

A very important element is the proper handle of cash flow to anticipate risks and biases… although the entrepreneur dreams with selling enough volume at the right price and operate as light as possible; it is only the cash flow that indicates if that is effectively being attained.

The bigger the visibility and flexibility of funds, the higher level of freedom and room to maneuver attained to carry on solid entrepreneurships or accelerated growths.

Even though it is possible the entrepreneur’s priority to be innovation, productivity, and efficiency, by including financial management, it is more likely to reach the expected results.

The proper cash flow management allows to follow up austerity in critical moments, stability during inconsistent periods, and negotiation tools with customers and suppliers.

Investment rounds are frequently a key indicator of an entrepreneurship’s likelihood of success, I consider that in terms of operation, financing, and investment decisions, it is at least the same if not more relevant to know how, when and in exchange of what the cash flow goes in and out.

I conclude that cash flow is a key indicator of the performance and financial health from early stages of businesses. It is the oxygen that allows the rest of the business’ body parts to work with continuity and excellence.

Vanessa Villarreal Vera

Profesora de Contabilidad y Finanzas de programas académicos Profesionales y Educación Continua del ITESM. Obtuvo grado académico de Licenciada en Contaduría Pública y Finanzas en el ITESM, Campus Monterrey, cursó Maestría en Finanzas en EGADE.

Actualmente es mentora y asesora en áreas de Finanzas y Contabilidad para la Zona de Ei del ITESM; también Consultor Independiente con experiencia en asesoría de negocio para planes de factibilidad financiera de nueva creación y escalamiento de negocio, así como de análisis financiero.
Previamente se desempeñó en la práctica profesional corporativa en administración, contabilidad y finanzas.

Autora participante en el Libro Prácticas Educativas Innovadoras en Contaduría Pública y Finanzas publicado por el IMCP en 2018 y de artículos publicados por el Financiero y la revista del IMCP.
También, expositora para el IMEF Capítulo Universitario, United Nations Academic Impact, entre otros.