Cash outflow for a given period is literally the sum of all the cash amounts flowing out of a business during that period. Cash outflow is as the sum of all the negative cash flows, or outgoing cash payments made, during the period. Cash inflow, on the other hand, is the sum of all the incoming cash payments received in a given period.
Examples of Cash Outflow
Cash Outflow can have different meanings for companies active in different sectors or industries.
Below is a list of examples of cash flows that can be part of cash outflow:
- Cash payments made to your suppliers, for products (such as raw materials, etc.) or services you purchased from them
- Office rent payments or rent payments for another building your business is renting (e.g. warehouse)
- Car and other lease payments
- Payments of periodic interest that you need to pay on outstanding loans
- Tax payments you made to the government
- Salaries and other cash payments (e.g. for reimbursement of expenses) to employees
- Dividends paid to the shareholders of your company
- Cash purchases of property, plant, and equipment
- Payments for investments your business made (e.g. purchase of shares in another business as an investment)
- Cash loan repayments on outstanding loans
- Payments for loans given by other firms
- Payments for strategic acquisitions
As said before, the components of cash outflow will differ for businesses active in distinct sectors and industries. A retail company will spend most of its cash on merchandise purchases, whereas a consulting firm will see most of its money flow out due to salary payments to its employees.