Estructura el Flujo de Caja de tu Startup

How to build a cash flow for a startup?

Cash flow is an essential tool for any startup, as it provides a clear picture of how cash moves within the company. In this guide, we will explore the creation of a cash flow using a fictitious case study of the startup "Advisor", which connects consultants with people and companies.

What assumptions are we using?

• B2C segment: Pay cash, i.e., the same day the revenue is recorded.
• B2B segment: Takes 30 days to pay. This means that the revenue is recorded today, but the cash is not received until the following month.
• Company payments: All costs and expenses are paid in cash. The company pays all salaries, software and other services immediately.
• Future investment: A pre-seed investment of $25,000 in cash is expected to be received in six months, with no further debt planned.

How to record the cash generated by the operation?

1. Sales revenue:

   • The B2C segment pays immediately, so the month's revenue is recorded and received instantly.
   • The B2B segment pays 30 days in arrears, so one month's revenue is received the next.

2. Payments for costs and expenses:

   • Costs: These are paid in the same month in which they are incurred.
   • Sellingand administrative expenses: These are also paid in the month in which they are incurred.

For ease of reading in Excel, it is recommended to record payments as negative numbers. This helps to easily distinguish between cash inflows and outflows.

How to manage cash generated by financing activities?

In the case of "Advisor", some categories are identified:

• Credits: $20,000 was recorded as an initial interest-free loan, which is paid on a monthly basis for 60 months.
• Partner contributions: Two partners contributed $20,000 in cash, while another contributed $10,000 worth of equipment.
• Investment rounds: $25,000 in cash is expected to be raised within six months.
• Dividend payments: No dividends are contemplated at this stage.

How to close the cash flow?

To close the cash flow, operating, financing and investing activities are added together, which provides a clear view of the cash movement in each period:

• Total cash generated by operating: cash from sales minus costs and expenses are added together.
• Total cash provided by financing activities: Includes inflows from loans and contributions less any periodic loan payments.
• Total cash provided by investing activities: Although Advisor has no planned investments, it would normally include the purchase of fixed assets.

Finally, the movement for the period is calculated and the ending balance for the period which, for the first month, will be equal to the month's movement. For consecutive months, the ending balance of the previous month is added to the current period's turnover.

The cash flow structured in this way makes it possible to visualize the overall financial statement and to anticipate problems or financing needs. In addition, it allows connecting the financial statements, integrating the cash flow, the income statement and the balance sheet for a complete view.

Why is this model crucial?

Maintaining a strong interconnection between the different financial statements ensures consistency and provides a broad perspective of financial performance. In the next units, we will explore how to integrate these models for a robust financial strategy.