Cancelo, 31, joined Barcelona on loan from Al-Hilal in January and has been one of the most impressive performers in Flick's side across the second half of the La Liga title-winning campaign.
He displaced Alejandro Balde at left-back entirely, prompting Flick to issue a direct message to the 20-year-old Spaniard that he must improve significantly.
Flick spoke openly about his desire to keep the Portugal defender after Barcelona's win over Real Betis.
"Everyone has seen what he has given us in recent weeks. I value him a lot, but it's not easy. Deco has to manage it and we have to wait to see what happens. He is a fantastic player who gives everything for this club."
Cancelo's own desire to remain is unambiguous. He has made clear he wants to continue in Barcelona and pointed to a difficult experience at Al-Hilal as part of his motivation, publicly accusing the Saudi club of misleading him over his registration in the Saudi Pro League.
"In Al-Hilal, unfortunately, there were people who were not telling me the truth. They told me they were going to register me on the Saudi league list and then, when the moment came, they didn't do it. I always keep my word and would never change it. I have always been like this: direct and without rancour."
Barcelona had hoped Al-Hilal would allow Cancelo to leave on a free transfer given the relationship between the player and the club. That appears increasingly unlikely. Al-Hilal, who paid Manchester City around €27m to sign Cancelo in 2023, are expected to demand a fee to sanction a permanent exit. The club is under no obligation to negotiate and holds Cancelo's contract until 2027.
Barcelona will attempt to agree a figure described as reasonable — significant enough to satisfy Al-Hilal while not triggering a structural breach of the club's financial fair play obligations. Deco is expected to lead those negotiations once the season concludes.