Cash flow: what it is, how to calculate it and how to forecast it (with an example)

1) What cash flow is

Cash flow is the actual movement of money coming into and going out of your business.

It's not revenue.
It's not ROAS.
It's not margin.

It's when you get paid and when you pay.

How to calculate and forecast your cash flow (with an example)

The cash flow formula is simple: money in − money out, over a period. The hard part isn't the math, it's sorting out when each peso comes in and goes out. To forecast your cash flow, you build this month by month (or week by week):

• Opening balance — the money you have in the account today.
• Inflows — actual payments based on when the payment gateway and installments pay out to you (not the sale date).
• Outflows — suppliers, ads, salaries, taxes, fees.
• Closing balance — opening balance + inflows − outflows. That closing balance is the opening balance for the next period.

Simple example: you start the month with $1,000,000. You expect to collect $4,000,000 (careful: what actually pays out this month, not what you bill). You'll pay $3,500,000 across suppliers, ads and taxes. Your projected closing balance is 1,000,000 + 4,000,000 − 3,500,000 = $1,500,000. If that number comes out negative in any month, you see it before you run out of cash — and that's the whole point of forecasting.

Lots of people build this in an Excel spreadsheet, and it works… until installments, payout timing and taxes make the forecast stale within a few days. That's where an Excel cash flow stops being enough.

2) Why selling isn't the same as getting paid

In LATAM e-commerce, this happens all the time:

• You sell today.
• The payment gateway pays you out in 7, 14 or 30 days.
• Installment sales get collected in parts.
• Your supplier asks for payment up front.

Result: the money isn't there when you need it.

3) The enemies of cash flow in LATAM

Installments

You sell in 6 installments, but you pay your costs today.

Taxes

VAT and gross receipts tax (IIBB) hit before you see real profit.

Advertising

Meta and Google charge daily. The payment gateway pays out later.

Stock

Buying inventory ties up cash.

Cash flow is a timing game.

4) Signs your cash flow is at risk

• You sell more but depend on credit to operate.
• You don't know how much real money you'll have next week.
• You scale ads but your bank balance goes down.
• You can't restock even though sales are rising.

If growth is choking your cash, something is structured wrong.

5) How to get real control of your cash flow

You need:

• A forecast of real inflows (not just sales).
• A supplier payment calendar.
• The real impact of taxes.
• Daily profitability connected to cash.

Healthy growth isn't just selling more.
It's keeping cash positive while you grow.

Frequently asked questions

What is cash flow?

It's the actual movement of money coming into and going out of your business over a period. It's not revenue or profit: it's when you really get paid and when you really pay.

How do you calculate cash flow?

Opening balance + actual inflows − actual outflows = closing balance. The key is to record inflows when they pay out (based on the payment gateway and installments), not when you make the sale.

What is a cash flow forecast?

It's the same math, but looking forward: you estimate inflows and outflows for the coming months to see whether you'll run out of cash at some point. It lets you decide on stock purchases and ad spend without the risk of going broke.

Can I track cash flow in Excel?

You can, but in LATAM e-commerce a spreadsheet goes stale fast: installments, Mercado Pago payout times and taxes change the real dates you get paid and pay. That's why it makes sense to use a tool that updates it on its own.