Types of Cash Inflows and Outflows (2024)

Chase Chats Navigating Cash Flow

Introduction: 1:19
Business Cash Flow Tool: 8:17
Competitor Analysis Worksheet: 13:36
Customer Analysis Worksheet: 15:45
Vendor Analysis Worksheet: 21:41

Side note:

Legal disclosures appear.

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The statements, views, and opinions that will be expressed during the event are those of the presenters and are not endorsed by, nor do they reflect the views or positions of J.P. Morgan Chase Bank N.A, or any of its affiliates. Neither the bank nor any of its affiliates are liable for decisions made or actions taken based on any of the information covered during the event. Please consult with your personal tax advisor on all tax-related matters.

Side note:

Energetic music plays.

Logos:

The Chase octagon symbol. Chase for Business (registered trademark).

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Chase Chats Webcasts - Navigating Your Cash Flow.

On screen:

A woman with brown hair and glasses, Heidi Widom, speaks to us remotely from a room with framed diplomas hanging on the wall.

Text on screen:

Heidi Widom, Chase Management Division Manager, Chase.

Heidi Widom:

Hello, everyone, and welcome to our Chase Chat, Navigating Your Cash Flow. I am really excited you're all here with us today, and you are going to really leave with some great resources-- a lot of new ideas, and really actionable ideas. My name is Heidi Widom, and I manage the Northeast cash management consultant team here at Chase. What my team does, is we go out in the field, we meet with our small business clients along with our bankers. We discuss our clients' cash inflows, their receivables, cash outflows, their payables, and we always make sure that they are protected from fraud.

Introduction: 1:19

I've been at the bank for over 25 years, and the last 11 of which I've spent with small businesses. I really love visiting with small businesses. I love meeting people. I love learning about what they do, and really, the challenges that they face. As we all know, cash flow is one of the biggest challenges faced by small businesses today. We all know how the world has changed since COVID-19. Everyone is out there navigating uncharted waters, and really, you need to make sure your business is in the right position to face this time of uncertainty. If you're experiencing fluctuations in your cash flow, you are not alone. COVID has really highlighted the necessity of having enough cash on hand to survive when there's little or no revenue coming in-- and we all know, for an uncertain amount of time. In fact, according to the JPMorgan Chase Institute, 50% of small businesses had only enough cash on hand to cover less than 15 days of expenses.

On screen:

A slide labeled "Why Cash Flow?" provides information regarding the importance of managing and maintaining a healthy cash flow. The slide displays a graph labeled "Distribution of cash buffer days in 25 metro areas." It shows the Median cash buffer at 15 days. It shows that 50% of small businesses had fewer than 15 cash buffer days.

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Small print text appears.

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Cash buffer days measured from 2013 to 2017 in the cross sectional sample.

Source: JPMorgan Chase Institute, April 2020.

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Chase for Business.

Heidi Widom:

And this pandemic has lasted a lot longer than 15 days. And as a result of that, we've developed the suite of online tools to help you position your business for success.

Text on screen:

cashflow.chase.com. Navigating Your Cash Flow - What You'll Learn:

Visualize a year of cash inflows and outflows to identify opportunities for improvement.

Analyze your inventory and vendor relationships to decrease unnecessary expenses.

Optimize your workforce to increase employee productivity and contributions.

Communicate with customers to collect payments and broaden your base.

Evaluate the competitive landscape and how your product, value and price compare.

Navigate slow times in your sales cycle.

Logo:

Chase for Business.

Heidi Widom:

So the site is called cashflow.chase.com. It is really easy to use. And the best thing about it is it's customizable for your business. So what you will see is there are three main topics. Understanding Cash Flow, which gives you an overview. Increase Cash In-- you always want to make sure you're getting cash into your business and collecting it as fast as you can. Decreasing Cash Out-- or as I always tell my clients, managing your cash out. Making sure that you're spending less, and you're also spending it more slowly. Each topic has, really, five different modules in it. And I'm just going to mention them quickly, because we're going to get a chance to go into a little more detail. There are videos. There are articles. We also have case studies, interactive tools-- and really, what we're going to highlight in today's session, are the downloadable worksheets.

Text on screen:

cashflow.chase.com. Navigating Your Cash Flow - Tools to Use: Downloadable Worksheets. Use these frameworks to explore how to positively impact inflows and outflows.

Competitor Analysis;
Customer Base Review;
(and) Vendor Analysis.

Logo:

Chase For Business.

Heidi Widom:

What you'll be able to do is go on the site, input the information specific to your company, and actually gain some actionable insights. What could you do? What could you take from that to make your business more successful? One of the keys I just want to mention, which we are going to be going over, is the Business Cash Flow tool.

Text on screen:

cashflow.chase.com. Navigating Your Cash Flow - Tools to Use: Interactive Cash Flow Tool. Create a customized snapshot of how cash flows in and out of your business:

Based on your specific inputs;
Visualize annual cash flow;
(and) see the impact of changes to inflows and outflows.

Logo:

Chase For Business.

Heidi Widom:

This is going to help you create a customized 12-month snapshot of how cash flows in and out of your business. This is really key, given the impact we've seen from COVID, and from the ever-changing market conditions. Now what I'd like to do, is welcome Devon Briger and Amy Lai from the Acceleration Project.

On screen:

Heidi shares a three-way split screen with Amy (a black-haired woman with glasses) and Devon (a woman with blonde hair and brown eyes).

Heidi Widom:

The Acceleration Project is a woman-founded, woman-led organization, providing strategic and tactical advice to small businesses with an emphasis on supporting women and minority-owned enterprises. Devon and Amy are here to walk us through a demo of the tools and resources in the Navigating Your Cash Flow program.

On screen:

Devon speaks remotely from her home.

Text on screen:

Devon Briger, Consultant, The Acceleration Project.

Devon Bringer:

Hi, everyone. I'm Devon, and thank you all for being here today. Just a little bit about my background. I founded a retail juice business in 2010. We expanded our product line into superfood smoothies, and acai bowls, and other healthy-for-you food products. I recently had the opportunity for an exit, and thus, I've joined TAP in order to hopefully be able to pass along some of my small business expertise to others.

On screen:

Business Cash Flow Tool: 8:17

Devon Bringer:

The Cash Flow tool allows you to split them between a number of sales categories. You can enter the frequency, if it is a fixed amount, or if it changes over time. When my business started, my sales were mostly online, and through direct deliveries to customers. The retail component kicked in when we opened up our first store, midway through the year. As is typical of a startup, I also had financing inflows that I used to start the business.

For our juice business, my business partner and I both contributed money into the business. Some businesses take out a loan, and when the cash is received, that would also be considered a financing inflow. For us, our cash contributions into the business happened over the course of the year as we grew. And the money was used to buy raw material, equipment, furniture, and other things-- all of the expenses that it takes to run a business.

Amy Lai:

That's right. Now some businesses might also have investing inflows. Now that's cash that you receive from selling equipment, or real estate that you have, that your business owns. Or possibly, renting out or subletting the real estate that the business owns. In a less common example, when your business maybe have made a loan to another business and you're receiving interest or principal. Those are investing inflows. You might not have this kind of inflow every year, but you do still want to consider them in your projections.

Heidi Widom:

Great. Terrific to really start to get organized, to start using this tool. Now let's move on to outflows.

Amy Lai:

Now operating outflows, Heidi, are what you typically think they are-- they're the day-to-day expenses of running a business.

On screen:

As Amy speaks a cursor navigates through the online Cash Flow tool, which displays the "Outflow" screen. The screen displays a series of drop down menus, marked:

Category;
Description;
Frequency;
Month;
(and) Amount.

Amy Lai:

For most businesses, the largest expenses tend to be payroll, raw materials, or inventory, and rent. And for other businesses that maybe don't have a store, and they're not retail-oriented, it could be payroll or lease payments on machinery. And don't forget, there's a lot of other expenses I'm sure most owners know-- things like marketing, delivery costs, insurance.

So just like we did on the Inflow screen, you can see on the Outflow screen, you can enter frequency, if it's a fixed amount, or it maybe changes over time. If it's monthly, or quarterly, or a one-time. So like I said before, it obviously does not surprise business owners that there are quite a number of expenses to think about. Devon, for her first year of business, also had investing outflows since she opened the retail location. Her businesses had to purchase physical assets, like furniture and equipment, and did renovations on a space. There were also lease payments that she had to make on physical assets like a delivery van. These are considered investing outflows.

Devon Bringer:

So an owner also should think about financing outflows, and those would be outflows related to paying back a bank loan, or a line of credit, or a distribution back to owners in the form of dividends, return on capital, or stock buy-back. These could be lumpy for a small business, but the timing and the amount should be considered when you're going through this process. And once the inflows and outflows are complete, you will see the results on the Compare screen.

On screen:

The Cash Flow Tool's "Compare" screen appears, displaying a cash flow summary for the year, including a monthly break-down of total inflows and total outflows. It also shows the entire year balance.

Heidi Widom:

That's great, Devon and Amy. Thank you. It's really great to actually see a full year of cash flows. So tell me, when you have that information as a business owner, how do you use that data for planning?

Devon Bringer:

Well as you can look when you see the graphs...

On screen:

The monthly cash flow graph reappears, showing:

inflows exceeding outflows in January, February, April, and November;
inflows and outflows roughly equal in March, July, August, and October;
and outflows exceeding inflows in May, June, July, September, and December.

A pie chart shows the "Entire year inflow breakdown" at 63% Operating and 37% Financing. Another pie chart shows the "Entire year outflow breakdown" at 78% Operating and 22% Investing.

Devon Bringer:

...you can see the output. And that Cash Flow tool really highlighted to me that I needed to dig deeper into the numbers to understand the drivers of my revenues and my expenses. As you can see from the chart, my outflows in May, June, and July were significantly higher than my inflows, which decreased my overall cash balance. This tool would be a framework for me to brainstorm on what I could do the following year, to grow my revenues and cut my expenses, so I could get closer to ending the year with positive operating cash flows and create less variability in my monthly outflows. There was a lot of factors I needed to take into consideration in order to increase my cash in and decrease my cash out.

Heidi Widom:

Great. Thanks, Devon. I know there were some other tools that I mentioned earlier on the cashflow.chase.com website. So can you please walk us through, maybe the competitor analysis worksheet, next?

Competitor Analysis Worksheet: 13:36

Amy Lai:

Sure. So like Devon said, to think about increasing your inflows, meaning your revenue, there really are two variables to think about in every single business. What you charge, meaning your price. And how much you sell, or how much services you provide, meaning your volume. Price times volume is your revenue. So it's hard to really think about these in a vacuum. So first is the spreadsheet that Heidi had mentioned, that you can download from the Chase website to help you think about your competitors--

On screen:

The Competitor Analysis tool appears, displaying information and a graphic showing Value features, Value rating, Price, and Price rating for "My business" and eleven "Competitors."

Amy Lai:

--the Competitor Analysis worksheet. It is a worthwhile exercise, as the insights can really help an owner hone into her value proposition.

Devon Bringer:

So using this worksheet, the first thing that I did was I listed out all of my competitors. And then I listed out what characteristics of a successful business in my market had. I looked at my principal competitors to see what they were doing well, and where they were differentiating. This exercise highlighted to me where I needed to focus my efforts to drive interest in my product. And I discovered two key things my competitors were doing. One, they were diversifying their product offerings. And two, they were expanding their retail presence.

On screen:

A chart, broken into four quadrants, shows "My Business" and "Competitors" price and value ratings, with:

Quadrant 2 as the overall highest rated;
Quadrant 4 as the second overall highest rated;
Quadrant 1 as the third overall highest rated;
and Quadrant 3 as the lowest overall rated.

Side note:

"My Business" is positioned in Quadrant 2.

Devon Bringer:

As you can see from the chart, my pricing and value were in the second quadrant, which is the highest. aBut I had several competitors-- namely, LA Juice Market and Juice Cafe-- that ranked higher in value and higher in price. I also noticed that Ritual Wellness ranked higher in value than my business, at a 6, but was selling the product the same price of $8. This process really forced me to think about my product line expansion as a way of increasing my average price, and to expand my retail presence to better serve my customer base. Understanding your competitive landscape is critical to your business's success in staying with, or ahead of the trends in the marketplace. I would recommend regularly revisiting this worksheet to assess your position amongst your competition, and make informed decisions as the next steps to grow your business.

Customer Analysis Worksheet: 15:45

Amy Lai:

And to Devon's point, this is not a one-time, static exercise. It really requires a good thought process on an ongoing basis. Because your competitive landscape, as you all know, changes all the time. And then of course, once you generally understand your competitive landscape, it's time to understand your customers. And there is another tool on the website called Customer Analysis worksheet. That's really going to help guide you to think about who your customers are and how best you can attract them.

Vendor Analysis Worksheet: 21:41

Devon Bringer:

Yes, Amy, that is right. And I will say, in our early days of business, what we mostly cared about was just getting the best quality products, delivered to us as quickly as we could. But as we started growing our business, we realized that we needed to focus on cost and quality. I'm going to walk you through an example using the Vendor Analysis worksheet in the Navigating Your Cash Flow program to outline my approach. Although quality remained our most important variable because we were selling a juice product, we decided that we needed to rank the cost over delivery time, because we really needed to reduce our costs.

On screen:

The Vendor Analysis Worksheet appears displaying information regarding:

Vendor name;
Current annual spend with vendor;
Small, medium, large, or potential vendor;
Current service or product purchased;
Product quality;
Price;
Timeliness of delivery;
Weighted score;
Potential action;
(and) contact.

Devon Bringer:

The Vendor worksheet helped us look at our vendors, and determine an approach for reducing our cost without sacrificing quality, by focusing on our highest rated vendors. This exercise also highlighted to us that we had way too many small vendors, but no one strategic relationship.

So we ended up identifying a couple of key vendors-- namely, Lakeside Gardens and Organic Vegetable-- as our produce suppliers, and Portola Valley Packaging and Promo Anywhere as our paper and packaging material suppliers. This was based on their ratings, and it allowed us to focus on creating a strategic relationship with those suppliers. And as a result, we were able to significantly reduce our costs. We were able to negotiate better terms, and prices, and delivery expectations. We ended up cutting several vendors-- GL Alfieri Produce Paradise, US Paper and Provisions, and American Labels, and we reduced our purchases with the middle tier. This reduced the number of suppliers we worked with, and thus reduced the complexity of our ordering process, so we saved money on labor from our purchasing manager.

Amy Lai:

Wow. This is just incredible work, Devon. Kudos to you. Now based on the results of all of these things-- the Competitor Analysis, Customer Analysis, Vendor Analysis-- there were decisions that were made to open more retail stores, diversify the product offering, reduce and streamline vendors. With all of this information, we're now going to enter these assumptions, and what that looks like, into the Business Cash Flow tool, to show you the impact of making these changes.

On screen:

The Cash Flow Tool shows monthly break-downs of:

Supplies;
Payments to Suppliers;
Payroll (and/or) Wages;
(and)Payments of Freight.

Devon Bringer:

So doing this deep dive into the key drivers of my business-- the competition, my customers, and my vendors-- was critical for me in mapping out a plan of attack for driving increased sales and reducing my costs.

On screen:

The monthly cash flow graph appears, showing:

inflows exceeding outflows in January;
outflows exceeding inflows in February;
(and) inflows and outflows roughly equal in the remaining months of the year.

Devon Bringer:

As you can see in the projections I set for the budget year, it highlights the amount of money I would need to secure to expand my product line and open up a couple of more retail stores.

On screen:

A pie chart shows the "Entire year inflow breakdown" at 83% Operating and 17% Financing. Another pie chart shows the "Entire year outflow breakdown" at 87% Operating and 13% Investing.

Devon Bringer:

It also shows the positive impact that this would have on my cash position, and the possibility of growing my business into profitability-- something that I clearly did not accomplish in my first year of business. I will say that I did not have these tools when I was running my business, but having them certainly would have made it a lot easier. And I learned a lot just going through the process of inputting this information.

Heidi Widom:

That's great. Thank you so much, Amy and Devon. I think really seeing how you actually use these tools on the Navigating Your Cash Flow site and bringing it to life for everybody in the audience has been terrific. What I would really like to do is encourage everyone-- all our small business owners-- to go onto the tool, and really play around, and see what you could learn-- what insights you could get for your business, and how this could help you manage your cash position, and really help make your business more successful.

Now what I'd like to do is take some questions from the audience. The first question, "how would I extend my timing on accounts payable?" That is something I hear all the time, so I'm really curious to hear. Amy, what are your thoughts?

Amy Lai:

Sure, Heidi. I understand that as well, and it's a great question. It's important to manage your accounts payable period. A longer average payable period means that you can maximize your credit with your vendors, which in turn means that you're delaying your outflows, and taking advantage of every single inflow that you have. Here are some strategies. And obviously, they're all particular to your individual business, but I think some of these strategies should help across the board.

So first off, you should always discuss pricing and payment terms with your vendors, because an extended payable period obviously helps you with your cash flow. So for example, ask if you can have 60 days to pay even if that means forgoing the 30-day discount. One example. Another example is to renegotiate the due dates with your suppliers. So instead of paying all, or most of your bills, say, on the first of the month, or on the 15th of the month, try to stagger them. Ask if you can set up a new payment date in the middle of the month, or at the end of the month. This will just help you break up the payments so they don't all occur at the same time, and you have a lot of outflows going out all within a number of very short period of days.

Lastly, one suggestion is to set up an online banking account to automatically pay your bills. Paying your bills online would really help you not only to track your payables, but maximize your payment time frame. And again, Chase has great tools for that. I even do that for my own small business. So if you can negotiate payments on 60-day terms, for example, you can just pay them on day 59, or even 60, instantly, through your online account. The longer you're able to hold onto your cash, the longer you can afford to wait for your receivables to be collected. Because sometimes you don't have control over that.

Heidi Widom:

Some great tips, Amy. Thank you. Another question that came in, "what are some early signs of cash flow problem?" That is key. Devon, your thoughts?

Devon Bringer:

Yes, Heidi. That is really key. As we keep saying in this session, that it's really important to continuously track your cash flow so a cash flow deficiency does not take you by surprise. Understanding the warning signs of a potential cash flow problem, and better planning out your working capital, can help you prepare for tough times and to weather the storm successfully. Some of the key watch-outs are relying on big customers paying large bills to get you through tough times, having too many receivables and not being paid steadily, not negotiating discounts with your vendors, having a lot of short-term debt with large pay-downs, and having too much inventory-- especially if your sales are down.

Heidi Widom:

Great. Thanks, Devon. Let's take another question. "How does cash relate to P&L?" We hear this all the time. Amy, over to you.

Amy Lai:

Well it could be a very technical answer. But at the end of the day, just bear in mind that you really, ultimately need operating cash flow to be successful. So the cash flow statement, from an accounting perspective, is integrated with your P&L by net profit. So if you look at a cash flow statement, it starts, your first line item is net profit. And this amount is used to then calculate your cash flow from operations. What a cash flow statement does is to show you the exact amount of actual cash inflows and outflows, and tries to strip away some of the non-cash items. Like depreciation, for example. which ultimately is an expense, but it doesn't necessarily mean that it's a cash expense right away. So the income statement, or the P&L, shows a company's revenues and total expenses, including some of these non-cash expenses. So that's really how it relates. But just keep in mind, you still need to have operating cash flow that's positive, in the long-run, for you to be successful and have positive P&L.

Heidi Widom:

Great. Thanks, Amy. Oh, this is a great question. "What is the perfect cash buffer?" This is a tough one. I'm going to turn it over to Devon in a minute. But as I said earlier, about 50% of small businesses really have 15 or less days of cash buffer. We know that is not enough. So Devon, what are some thoughts?

Devon Bringer:

Well Heidi, you're absolutely right. This is a really tough question. And there's really no perfect cash buffer, because it really depends on your business, as well as your comfort level around risk. Many experts recommend that you have three to six months worth of personal expenses saved up for your own emergency fund, while businesses should aim for a year's worth of expenditures. Now obviously, that could be pretty unrealistic, especially for many small business owners, so this might sound like a big ask.

And in J.P. Morgan's research, this is something that you should work towards as a goal. A good process for figuring out this for your business is to look back at the past year's financial inflows and outflows, using the Cash tools, and determining how much you spent in the past year, using those inputs. This will give you a rough idea of how much money you need to operate your business for a full fiscal year. Then if you want to dig a bit deeper, take into consideration your business's past behavior.

For example, was last year a business-building year, and expenses were higher than usual because of investments into your business? Do you experience predictable seasonal fluctuations? The amount of cash reserve on hand may also fluctuate, through the year, if you are a seasonal business. Also, what are your business goals? If your big growth goals, you will likely need more money for investments.

In the end, the amount of cash buffer you need really comes down to what makes you most comfortable as a business owner. Some people are more conservative in financial matters and play it safe with a bigger buffer. Others might feel more comfortable with just six months worth of finances. But clearly, Heidi, to your point, we probably need more than 15 days.

Amy Lai:

Right.

Heidi Widom:

Great.

Amy Lai:

If I may chime in?

Heidi Widom:

Sure.

Amy Lai:

I think it's important to think about whether or not you have some very high customer concentrations. If you do, it would suggest that you may want to have a longer cash buffer, because you have quite a bit of exposure to particular clients. And if, for whatever reason, they have issues, then you may very well need to have a higher cash buffer to sustain any issues that they face.

Heidi Widom:

Great. Thank you so much, Devon and Amy. A lot for our small businesses to think about. Another question. "Do you have any suggestions for cash flow management for a seasonal business, where holidays are the biggest bump in the year?" Great timing, coming into this. Amy, some thoughts?

Amy Lai:

Yes. Especially since I'm sure, especially retail businesses, now, are trying to build up their inventory ahead of the holiday shopping season. so if you run a seasonal business, it's important to find alternative business options for the slower part of the year. So some suggestions are, hire your employees only during the busy times, develop your banking relationship with your J.P. Morgan banker that allows extra flexibility during those times. Close your doors and reopen them next year for the busy season-- develop those relationships with your landlords, for example.

Now clearly-- going back to our previous conversation-- this may very well be a business where you need to have a longer cash buffer. Save part of your earnings during those busy times to cover expenses during the slower parts of the year. And as I mentioned, like the landlord, arrange your vendor relationships that allow you to make larger payments when cash flow is high, and lower payments when those cash flows are slower, during those times of year. Find ways to be creative. Create off- eason demand, such as partnership with businesses, deals, during the slow times, with local customers. Or maybe, moving more of those sales online at those times.

Heidi Widom:

Thank you so much, Amy. And one more question, I think, we'll take today. "Do you have any suggestions for adjusting your pricing?" Devon, some of what you said about your business. I'd like to hand this one over to you, please.

Devon Bringer:

Yeah. This is a great question. One of the things that we did was offering add-on services. We actually had ability for our customers to add a boost to their smoothies, which was a way for us to increase our price. So offering add-on services is a really easy way to increase your price. But you could also consider a subscription- ased model for prepayment. This works if you're offering a regular service. And the advantage is that you have a secure cash pool for future costs, as well as resource scheduling. Another option is, instead of collecting money via invoices, you could add credit card payment option. This means more convenience to the user, and more timely, and reliable payments, with a regular schedule. When we did this, we actually increased our price just a little bit to make up for the extra charges. And we also offered discounts to our cash paying customers because we wanted to make it more attractive for them to pay cash.

Heidi Widom:

Another question came in. "Devon, how did you negotiate better terms and prices with the vendors that you prioritized, as you mentioned earlier?"

Devon Bringer:

Heidi, that's a great question. So in going through the process, when we realized that we had way too many small vendors, we actually then decided to work on creating a strategic relationship with a couple of vendors. And as a result, we increased our purchase amounts with those vendors. So we were then in a position to get to know them better, and negotiate better prices, because we were purchasing more volume from them.

Heidi Widom:

Great. Thanks. And another question. "How can I negotiate with my clients to expedite receipt of my accounts receivables?" Amy, you want to take that one?

Amy Lai:

Sure. I think your best bet, Heidi, in terms of expediting the receivables, is first off, make sure that you actually have a receivables process in place. Meaning, once your product is sold, or once your services are provided, invoice, invoice, invoice. Don't delay it. The second is potentially, with your customers, offer discounts for them to pay within an x period of day after your invoice has been sent. So even if it's a small amount, a lot of customers would be willing to pay you sooner, to the extent that they feel they have a discount.

So I think that those two are the most obvious ways, and the easiest ways, to achieve that. And especially if you have customers that have the ability to pay you online, set up an ACH, for example. So that once your service is provided, you've invoiced, and you set up a regular ACH to take those amounts-- obviously, as long as you've negotiated that with your clients.

Heidi Widom:

I love those suggestions, Amy. The only thing I would add--we're always telling our clients, make those invoices simple. Simple and clear invoice will get paid much quicker. Also, I loved what you said about some of the different tools to expedite the payments. Also, we're telling everybody-- especially in this COVID environment-- contactless and digital. So yes, as you're negotiating your terms, make sure you're also saying, how can I pay you? There's many different ways available, so what would work best? And use that when negotiating your terms.

Amy Lai:

That's great.

Heidi Widom:

OK. Thanks, everybody. So as we wrap up, what are some closing thoughts? We've covered a lot in our session today. So just really one key point for our small business owners as they really look to manage their cash position much more tightly this year. Amy, do you want to go first?

Amy Lai:

So I'd encourage you to play around with the tool. You know your business the best. Don't be gun shy about that tool. It's extremely flexible, and forgiving, and it's a great tool as analysis, to look forward. Don't think about it just to use, to see what your cash balances look like. Really use it to project, and estimate what it can be, and what it looks like in a bunch of different scenarios. That's my one suggestion.

Devon Bringer:

So I would definitely agree with that. I would also say that, actually having done this exercise for my first year of business, it was very daunting to start the process. But I think that, if you can dedicate the time to sit down, to really go through your process, and figure out what your inflows are and what your outflows are, you're going to find the time that you spend on this is very worthwhile. I actually really enjoyed the process of thinking about my vendors, thinking about my customers, and figuring out ways that I could increase my business. And as I mentioned before, I certainly would have loved to have had these tools during my first year of business. It would've been really helpful.

Heidi Widom:

That's great feedback, Amy and Devon. The only thing I would add, is what I really love about these tools is the whole scenario analysis. You can constantly change it, right? Different things that are happening in the market, different things going on in your business, different things going on in the lifecycle of your business. So what I always tell my clients, is make sure you're staying on top of this, on an ongoing basis. It's really not a one and done. It's great to do it, but really keep it fresh, and keep on top of it. And I always tell my clients to review these things at least every quarter, every six months, to just better be able to react to what's going on in the market.

So thank you so much, Devon and Amy, for really helping this come to life for us. There are some great tools on this site. And we really hope that all business owners-- everyone listening today-- will really get a chance to go in, use them, and see it can help you both increase your cash flows, manage your cash position, and of course, make your businesses more successful.

Text on screen:

Chase Chats Webcasts. Learn more at cashflow.chase.com.

Side note:

Legal disclosures appear.

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All loans are subject to other requirements and availability of funds under the SBA program. See SBA.gov and Treasury.gov for program details.

The Federal Equal Opportunity Credit Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Federal agency that administers compliance with this law concerning this creditor is the Bureau of Consumer Financial Protection, 1700 G Street, NW, Washington DC 20006.

The statements, views, and opinions that will be expressed during the event are those of the presenters and are not endorsed by, nor do they reflect the views or positions of J.P. Morgan Chase Bank N.A, or any of its affiliates. J.P. Morgan Chase Bank N.A, or any of its affiliates are not liable for decisions made or actions taken in reliance on any of the information covered during the event. Please consult with your personal tax advisor on all tax-related matters.

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The Chase octagon symbol. Chase for Business (registered trademark).

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FAQs

Types of Cash Inflows and Outflows? ›

Major operating cash outflows include supplier payments, inventory, payroll and rent. Smaller expenses, such as professional services and supplies, go here too. The next category is investing. Investing inflows include the sale of assets like equipment or property and rental income or loan receivables.

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What are the types of cash inflows and outflows? ›

Cash inflow may come from sales of products or services, investment returns, or financing. Cash outflow is money moving out of the business like expense costs, debt repayment, and operating expenses. The movement of all your cash—in and out—is recorded in detail on the cash flow statement in your financial reporting.

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What are the three 3 major types of cash flow? ›

Question: What are the three types of cash flows presented on the statement of cash flows? Answer: Cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction.

What is the difference between cash inflows and outflows ____________? ›

Cash inflow is the money going into a business which could be from sales, investments, or financing. It's the opposite of cash outflow, which is the money leaving the business. A company's ability to create value for shareholders is determined by its ability to generate positive cash flows.

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What shows the cash inflows and outflows? ›

Cash Flow Statement shows the inflows and outflows of cash during a particular period. A Cash Flow Statement shows how much cash is generated and used during a given time period.

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What are 3 cash outflows examples? ›

Types of cash outflow

Payments made to suppliers.
Payments made to clear borrowing such as bank loans.
Money used to purchase any fixed assets.
Dividends paid out to any shareholders.
Salaries and wages paid to employees.
Any transport costs – such as vehicle leasing fees – related to business use.

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What are examples of cash inflows? ›

Some examples of cash inflow are:

Revenue from customer payments.
Cash receipts from sales.
Funding.
Taking out a loan.
Tax refunds.
Returns or dividend payments from investments.
Interest income.

Dec 1, 2022

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How many types of cash flow are there? ›

Cash received signifies inflows, and cash spent is outflows. The cash flow statement is a financial statement that reports a company's sources and use of cash over time. A company's cash flow can be categorized as cash flows from operations, investing, and financing.

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What three things are categorized as outflows? ›

Major operating cash outflows include supplier payments, inventory, payroll and rent. Smaller expenses, such as professional services and supplies, go here too. The next category is investing. Investing inflows include the sale of assets like equipment or property and rental income or loan receivables.

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What three categories do cash flows fall into? ›

The cash flow statement is broken down into three categories: Operating activities, investment activities, and financing activities.

What are the major cash inflows and outflows from operating activities? ›

Cash flow from operating activities is the amount of money the company receives (inflows) from its core business of manufacturing and selling finished products or providing services along with outflows such as payments for expenses. Items included in cash flows from operations are: Cash receipts from sales.

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What are inflows and outflows in economics? ›

Capital inflows are defined as net purchases (difference between purchases and sales) of domestic assets by non-residents. Capital outflows equal net purchases of foreign assets by domestic agents excluding the central bank.

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How to manage cash inflow and outflow? ›

Here are some best practices in managing cash flow:

Monitor your cash flow closely. ...
Make projections frequently. ...
Identify issues early. ...
Understand basic accounting. ...
Have an emergency backup plan. ...
Grow carefully. ...
Invoice quickly. ...
Use technology wisely and effectively.

What are the two items of inflow outflow from investing? ›

The activities included in cash flow from investing actives are capital expenditures, lending money, and the sale of investment securities. Along with this, expenditures in property, plant, and equipment fall within this category as they are a long-term investment.

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What are the operating activities outflows? ›

Cash outflows (payments) from operating activities include:

Cash payments to acquire materials for providing services and manufacturing goods for resale. Cash payments to employees for services. Cash payments considered to be operating activities of the grantor. Cash payments for quasi-external operating transactions.

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How to decrease cash outflow? ›

Managing your cash outflows also requires that you follow one simple, but basic rule: Pay your bills on time, but never pay your bills before they are due. As you work to improve your cash outflows, you'll want to focus on a few key areas: Trade credit.

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What are irregular cash inflows and outflows? ›

Irregular cash flows occur when the project or investment generates different amounts of revenues and expenses in different periods. This means that the cash flows are not consistent or predictable.

What is an example of cash inflow and outflow from operating activities? ›

Cash outflows (payments) from operating activities include:

Cash payments to acquire materials for providing services and manufacturing goods for resale.
Cash payments to employees for services.
Cash payments considered to be operating activities of the grantor.
Cash payments for quasi-external operating transactions.

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