Inflows are the movement of money into your cash flow. Inflows are most likely from the sale of your goods or services to your customers. If you extend credit to your customers and allow them to charge the sale of the goods or services to their account, then an inflow occurs as you collect on the customers' accounts. The proceeds from a bank loan is also a cash inflow. Outflows are the movement of money out of your business.
Outflows are generally the result of paying expenses.
If your business involves reselling goods, then your largest outflow is most likely to be for the purchase of retail inventory. A manufacturing business's largest outflows will mostly likely be for the purchases of raw materials and other components needed for the manufacturing of the final product. Purchasing fixed assets, paying back loans, and paying accounts payable are also cash outflows. Hopefully, each time through the cycle, a little more money is put back into the cash flow cycle than flows out. Our case study illustrates what can happen to your business if you don't carefully monitor your cash flow, and take corrective action when necessary.