Cash inflows and cash outflows

Cash inflows are money received by a business. Cash outflows are money paid out by a business. They are the two directions in which cash moves.

Money coming in

Typical cash inflows include:

• Receipts from sales — money customers actually pay for goods or services.
• Capital introduced — money the owner puts into the business.
• Loans received — money borrowed from a bank or another lender.
• Money from selling assets — for example, selling a delivery van the business no longer needs.

Each of these brings cash into the business, which can then be used to pay bills and staff.

Money going out

Typical cash outflows include payments to suppliers for materials, wages and salaries, rent, utility bills such as electricity and water, other overheads such as insurance or advertising, loan repayments, and payments for stock or assets such as a new computer.

These payments are necessary to keep trading, but each one reduces the cash the business holds. For a small bicycle repair business, one week can bring both: