Cash flow is a term widely used in the financial area and is related to the difference in
recorded values between what was recorded and the real value of money present in a
company’s cash flow.
In short, cash flow occurs when the existing balance does not correspond to the value records.
Understanding the concept of cash flow is crucial for responsible financial management ,
ensuring transparency in operations, legal compliance and decision-making based on real
Come with us to understand how it works and check out the best tips to avoid it!
What is Cash Break?
Cash flow refers to the discrepancy between the theoretical value and the real value present in
a company’s cash flow.
It occurs when the existing balance is not the same as expected or
planned. In this sense, it is important to carry out strict control over cash movements to avoid
inconsistency in values and the emergence of financial problems, ensuring more precise and
How does Cash Break work?
Cash breakdown works based on the analysis of possible differences between the predicted
value and the existing value in cash. This process aims to verify the amount recorded in the
financial transactions carried out and the present value in the cash register.
Therefore, to be considered a cash loss, the difference in values must be negative, that is,
there must be a lack of money in the cash register. Otherwise, when there is extra money, it is
called cash surplus.
What are the causes of Cash Crash?
Cash shortage is a situation that can happen for a variety of reasons, such as, for example,
failures in accounting and recording of operations that lead to inconsistencies in the balance.
Another cause of cash flow is related to criminal activities, such as theft, fraud and
inappropriate diversion of funds.
Errors in financial calculations can also lead to cash shortages, as well as unrecorded deposits
and withdrawals, payments not processed or recorded, inconsistent cash flow, errors when
delivering or receiving change, unauthorized transactions, etc.
Why is avoiding Cash Crash important?
Avoiding cash flow is essential because it is directly associated with a company’s financial
Therefore, when it occurs frequently in an organization, it may signal that there are problems
in management or even a lack of internal control or the incidence of fraudulent practices in
Cash shortages can even result in significant financial losses, inconsistencies in cash flow
and, consequently, affect the company’s profitability .
For all these reasons, avoiding cash flow is essential to make money management more
efficient and minimize financial risks.
How to calculate the Cash Break?
Calculating cash shortfall involves comparing the expected value of cash on hand with the
actual existing value.
Normally, this calculation is made at the end of a specific period, such as at the end of the
working day of the employee who works as a cashier, for example.
Therefore, to make the calculation, the first step is to gather all data from transactions made
during this period, such as sales, withdrawals, change or deposits.
Then, add up the operations to obtain the expected value of money in the cash register and
count the values at the end of the period. Then, carry out the comparison and calculation of
the cash flow as follows:
Once you have the existing value, subtract the expected cash value. In case of a positive
result, there is a surplus of cash. If negative, it indicates a cash shortage, that is, there is less
money in the cash register than expected.
If the second case occurs, it is important to initiate an in-depth analysis of the situation to
understand the causes of the cash shortage and, thus, make more appropriate decisions.
What to do when a Cash Break occurs?
In the event of a cash shortage, as we mentioned, an assessment of the cause of this cash
discrepancy is recommended.
The objective is to provide reasons to take appropriate corrective measures, such as reviewing
transaction records and identifying accounting errors to improve internal control procedures
or investigate possible fraud.
Tips to prevent Cash Breakage from happening.
To avoid cash shortages , adopt strict practices and controls for counting, recording and
reconciling operations to ensure cash accuracy.
Also invest in training employees who work at the cash desk, so that processes can be carried
out correctly and within the standards established by the company.
An important tip is to use management systems that automate records, reducing human errors
and avoiding inconsistencies.
Establish a periodic monitoring routine to compare records with the value in the cash register
and identify any problems.
Another important precaution is to restrict access to the cashier only to authorized and
Also implement security measures, such as surveillance cameras and internal audits to
prevent fraudulent actions. Keep detailed records of all transactions and set cash accuracy
goals to reduce shortfalls.
When identifying incompatibility, investigate and resolve the cause of the cash
shortage. Another tip is to carry out regular external audits to ensure compliance with
Cash flow is a situation that can occur in any company, but remember that, to prevent it from
happening, you need to pay extra attention to cash flow and follow our tips.