I know a firm that closed a R$ 180 mil contract and went under the next month. How? It received a 30% down payment, spent it on paying overdue salaries, and the remaining 70% would only come in 6 installments. In month 2, with no more inflows, the cash hit zero. The problem was not lack of sales, it was cash flow management.
Why a firm that bills well goes under
Three classic mismatches:
- Revenue is slow, cost is monthly. You close a contract in January, receive the down payment, and the rest comes over 5 months. But rent, salaries, software come every 5th.
- The client is late. An invoice due on the 15th lands on the 28th. In between, your cash took an involuntary loan from the credit card.
- Cost grows with the firm, revenue does not grow proportionally. You hired a junior in February expecting sales in March. Sales came in May. 3 months paying a salary into the void.
Anatomy of an architecture cash flow
Four components:
- Forecast inflows - every contracted installment, with its expected date. Not "I am going to bill X", only what has a signed contract.
- Fixed outflows - rent, salaries, owner's pay, software, accountant, internet. You know it all at the start of the month.
- Variable outflows - outsourced work, rendering, printing, travel. Unpredictable, but estimable with history.
- Projected balance - current balance + inflows - outflows, projected weekly over the next 60-90 days.
The secret is the projected horizon. The monthly balance is not enough, you need to see 8-12 weeks ahead. If in week 7 the balance goes negative, you have 6 weeks to solve it (speed up an inflow, postpone an outflow, raise funds). Without a projection, the negative shows up as a surprise.
A practical 4-column model
It can be a spreadsheet or a platform, what matters is the structure. Row = week. Columns:
| Week | Inflows | Fixed | Variable | Balance |
|---|---|---|---|---|
| W1 (06-12 Jan) | R$ 18.500 | R$ 22.000 | R$ 3.200 | R$ 15.300 |
| W2 (13-19 Jan) | R$ 6.200 | R$ 0 | R$ 1.800 | R$ 19.700 |
| W3 (20-26 Jan) | R$ 0 | R$ 8.500 | R$ 2.100 | R$ 9.100 |
| W4 (27 Jan-02 Feb) | R$ 12.400 | R$ 1.200 | R$ 4.800 | R$ 15.500 |
Each row shows the accumulated balance for the week. When a week falls below R$ 0 or below the defined minimum reserve (recommendation: 1.5 months of fixed cost), you raise the alert before the problem happens.
Projected cash, updated automatically
Every proposal closed in Limify automatically feeds the cash flow with the contracted installments. Register your fixed cost, and you see the next 12 weeks on one screen.
Try it freeThe 30-minute weekly ritual
Without a ritual, cash flow dies. Every Monday, 30 minutes:
- Check last week's inflows - what came in, what was late.
- Update forecasts - did anyone pay early? Did any client ask for more time?
- Look 8 weeks ahead - did any week cross the alert? Where?
- Define 1-2 actions - collect from X, postpone Y, talk to Z about an advance.
- Note actual vs. forecast variance - you forecast R$ 18 mil and R$ 14 mil came in? Why? History calibrates the next forecast.
In 30 minutes a week you gain control over what used to be diffuse anxiety.
The 5 mistakes that quietly sink the cash
Mistake 1 - Mixing business and personal money
The company account paying for the personal grocery run. The company card on a family trip. It turns into fictitious cash flow, and the partner discovers the hole at the accountant. Solution: total separation, a fixed monthly owner's pay into the personal account.
Mistake 2 - Collecting late
The invoice is due on the 15th, no one looks until the 25th. The client forgets, you forget, and by the time you remember it is already a problem. Solution: automated collection with a reminder 5 days before the due date and 1 day after.
Mistake 3 - Not building a reserve into the price
A 30% target margin that becomes "the month's profit". Wrong: part of the margin is a reserve to cover a weak sales month. Whoever does not reserve goes under on the first bad week.
Mistake 4 - Growing without cash
You hired a junior because "there is demand". Demand became a contract in 3 months. The junior's salary and charges for 3 months without coverage = R$ 18 mil of a hole. Solution: a closed contract before hiring, or cash to cover 4 months of the new hire's salary.
Mistake 5 - Trusting a client who is always late
You know that client X pays 15 days after the due date. But you project the inflow on the right date, and when it is late, it becomes a crisis. Solution: forecast by payment history, not by contractual date.
Cash flow is not a spreadsheet, it is a habit. Start simple, ritualize it, adjust with reality. In 60 days the firm becomes predictable, and the feeling of "I do not know if I will manage to pay next month" disappears.
Next read: How to organize your firm's finances in 30 days - a weekly plan to leave the messy Excel behind.