Running a business has never been straightforward. As well as winning customers, meeting tax obligations, managing teams and keeping pace with an increasingly competitive market, business owners need to ensure that their company’s finances remain healthy even during periods of economic uncertainty. Against this backdrop, a recent survey by Serasa Experian revealed a finding that deserves every manager’s attention: 47% of small and medium-sized enterprises believe that poor financial management is the main reason businesses close in Brazil. 

The finding is striking because it ranks above factors frequently cited as major obstacles to entrepreneurship in the country. Respondents place poor financial management ahead of the tax burden (40%), bureaucracy (34%) and even a lack of credit or capital (29%). 

In other words, business owners themselves recognise that many of the challenges companies face are not solely external. A significant part of a business’s long-term viability depends on its ability to manage income, expenditure, cash flow and financial planning. This perception highlights an important shift in how SMEs approach management: growth is no longer simply about selling more, but also about making better use of the resources available. 

What did the Serasa Experian survey reveal? 

The survey conducted by Serasa Experian interviewed 511 small and medium-sized enterprises across different regions of Brazil and sought to understand which factors business owners associate with business closures. The study found that almost half of respondents consider poor financial management to be the main reason businesses cease trading.  

The findings become even more relevant when business owners assess their own companies. According to the survey, 58% of respondents say that financial management is among the main risks to the continued operation of their business. This proportion rises with company size, reaching 76% among medium-sized enterprises. 

Another interesting finding concerns preparedness for periods of financial difficulty. Although 70% of companies say they have some form of contingency plan for cash flow crises, this figure falls to just 54% among individual microentrepreneurs (MEIs) and microenterprises. This demonstrates that the most vulnerable businesses are often the least prepared to weather periods of instability. 

According to Mariana Figueiredo, director of products and technology for small and medium-sized enterprises at Serasa Experian, a thorough understanding of cash flow, income and costs enables business owners to make decisions with greater confidence and anticipate potential difficulties. 

Why do so many businesses face financial difficulties? 

When people think of poor financial management, they often imagine serious problems or misguided decisions with far-reaching consequences. In practice, however, difficulties tend to arise from small mistakes that accumulate over time. 

A company can achieve strong sales and still encounter financial problems. This is because turnover and cash generation are not the same thing. Businesses that sell a great deal but offer long payment terms, for example, may struggle to meet day-to-day expenses. Similarly, gradual increases in operating costs can erode profit margins without the manager noticing straight away. 

Another common factor is a lack of financial visibility. Many SMEs still manage their figures using overly manual processes or relying solely on bank transactions. In such cases, it becomes difficult to forecast future scenarios, identify trends or take preventive action against potential problems. 

In an economic environment characterised by market fluctuations, changing consumer demand and rising operating costs, predictability becomes an extremely valuable asset for any business. 

Cash flow remains the main indicator of financial health 

Of all the tools available for effective financial management, few are as important as cash flow. Cash flow allows businesses to track money coming in and going out over time, providing a clear picture of their financial position. It enables managers to identify periods of greater financial pressure, anticipate funding needs and assess the business’s ability to meet its commitments. 

The problem is that many companies monitor only their current bank balance. This practice creates a false sense of security. A seemingly healthy cash position today may conceal future difficulties if significant payments are scheduled or income has not yet actually been received. 

Sound financial management therefore looks beyond the present. It continually uses forecasts and scenarios. Companies that can anticipate challenges are usually better able to adapt and navigate difficult periods with far greater peace of mind. 

How can financial management be improved without adding bureaucracy? 

A common concern among business owners is the idea that improving financial controls will require more processes, more spreadsheets and more administrative time. In reality, good financial management should simplify decision-making, not complicate it. 

Automate wherever possible 

There are now numerous tools capable of consolidating financial information, automating transaction entries and providing reports updated in real time. By reducing repetitive manual tasks, companies become more productive and reduce the risk of operational errors.  

Automation also allows business owners to devote more time to strategy and less to organising information. Serasa Experian itself highlights the importance of technology in supporting forecasts of income, expenditure and future scenarios, helping businesses make decisions with greater confidence. 

Separate fixed and variable costs 

Another important practice is to understand clearly which expenses are fixed and which vary according to the company’s activity. This classification helps identify opportunities for optimisation and makes it easier to develop more realistic financial scenarios. The better the understanding of operating costs, the greater the capacity for planning tends to be. 

Develop contingency plans 

The Serasa Experian survey revealed that not all companies have structured plans to deal with cash flow crises. A contingency plan need not be complex. It can include simple measures such as reviewing non-essential expenditure, monitoring incoming payments more closely, arranging pre-approved credit facilities and checking financial indicators more frequently. What matters is knowing in advance which decisions can be taken if financial difficulties arise. 

How NewSun’s clean energy subscription helps simplify financial management for SMEs 

Among the various recurring expenses that affect companies’ cash flow, electricity is particularly significant in many sectors. Depending on the nature of the business, energy costs can account for a substantial share of the monthly budget and directly influence the predictability of its finances. 

It is in this context that NewSun’s clean energy subscription emerges as a tool that can contribute to more efficient and strategic financial management. 

The model allows companies to access a renewable energy solution without having to invest in equipment, install solar panels or carry out building work or alterations to the property’s infrastructure. Electricity continues to be supplied as normal by the distribution company, with no operational disruptions or need to suspend business activities. 

This feature is particularly important for SMEs because it avoids substantial upfront investment and eliminates concerns about maintaining their own equipment. Rather than allocating resources to energy infrastructure, companies can focus their investment on their core business. 

A clean energy subscription also helps make energy consumption costs more predictable. At a time when the Serasa Experian survey shows that financial management is perceived as one of the main risks to businesses, reducing the unpredictability of recurring expenses takes on strategic value. 

Another significant benefit relates to sustainability. By incorporating practices linked to the energy transition without increasing operational complexity, companies strengthen their ESG agenda while improving their financial management. In this way, economic efficiency and environmental responsibility go hand in hand. 

Predictability is a competitive advantage 

When business owners think about growth, their attention usually centres on sales, marketing and commercial expansion. Although these factors are extremely important, an often-overlooked element separates resilient companies from vulnerable businesses: predictability. 

Companies that can forecast income, control expenditure and understand their future cash requirements make better decisions. They negotiate with greater assurance, invest with more confidence and are much better prepared for periods of uncertainty. 

Strengthening financial management should therefore not be seen merely as a defensive measure. It is a growth strategy. The clearer the understanding of an organisation’s financial position, the greater its ability to identify opportunities and respond quickly to market changes. 

This is precisely why financial management ranks above even the tax burden and a lack of credit among the factors associated with business closures. 

Financial management should not be a priority only in times of crisis 

One of the main conclusions of the Serasa Experian survey is that many companies recognise the importance of financial management, but not all are equally prepared to face challenges. 

Perhaps the most important lesson is this: financial management is not something to tackle only when difficulties arise. It should be part of a company’s everyday operations, guiding strategic decisions and providing a clear view of the future. 

Small measures, such as automating financial controls, monitoring indicators, developing contingency plans and seeking greater predictability in recurring expenses, can have a significant impact over time. 

In an increasingly competitive business environment, companies that understand their numbers tend to make better decisions. And companies that make better decisions are usually better prepared to grow sustainably, overcome challenges and seize opportunities when they arise.