Cash Outflow

What is cash outflow?

Cash outflow is any money going out of your business. When you pay for materials, that's cash outflow. When you pay rent, wages, or loan payments, those are all cash outflows. Understanding where your cash goes is just as important as tracking where it comes from.

For contractors and small businesses, managing cash outflow means making sure you have enough incoming cash to cover your obligations.

Common types of cash outflow

Money typically flows out of small businesses through:

• Operating expenses — Rent, utilities, insurance, subscriptions
• Materials and supplies — Job-related purchases and inventory
• Payroll — Wages for employees and subcontractors
• Loan payments — Principal and interest on business debt
• Equipment purchases — Tools, vehicles, machinery
• Tax payments — Income tax, sales tax, payroll taxes
• Owner distributions — Money taken out of the business for personal use

Controlling cash outflow

While you can't eliminate cash outflow, you can manage it strategically: negotiate better payment terms with suppliers, time major purchases when cash is strong, avoid unnecessary expenses, and review subscriptions and recurring costs regularly.