Cash Flow – Introduction to Cash Movements

Every business, whatever industry it is in, has cash flowing through it. Active cash is a sign of a healthy, thriving business.

Cash comes in from a variety of sources and leaves in a number of different directions. It is important that a business not only keeps track of these movements in cash flow but also forecasts them, in order to ensure that there is enough business funding on hand for its immediate needs.

How much cash could you release from unpaid invoices? Compare factoring quotes instantly online >>

Main Sources of Cash Flowing into a Business:

  • Income from customers
  • Income from savings and investments
  • Loans
  • Royalties
  • Receipts from sale of assets
  • Insurance settlements

Customer income is often relatively consistent over time although it can be subject to seasonal highs and lows. Cash flow from loans and asset sales is likely to be in large, one-off lumps.

Summary of Cash Outflows

There are many ways in which cash can leave a business. Here is a list of the most common reasons:

  • Payments to suppliers of goods and services
  • Rent payments
  • Payments to employees, including benefits such as pension contributions
  • Tax settlements, such as VAT, PAYE and National Insurance
  • Interest on loans
  • Payments for purchase of major assets

Cash outflows require careful management due to differences in timing. Suppliers are usually paid monthly as is PAYE/NI, but rents and VAT are often paid quarterly.

Managing the Gap Between Inflows and Outflows

There is often a gap between money being paid out to suppliers and money being received from customers. These, along with large quarterly payments of VAT and rent, can put pressure on cash flow.

So it makes sense for firms to have business funding arrangements in place, allowing them to focus on commercial activity rather than worrying about cash flow. Invoice finance in one popular way of bridging the finance gap because it releases funds tied up in the sales ledger and reduces the amount of time spent on credit control.

Touch Financial Sources Cash Flow Solutions

Touch Financial are the UK’s leading commercial finance broker and we bring together organisations looking for funds and organisations who specialise in funding business. We operate with a carefully chosen panel of funders ranging from well known banks such as Lloyds TSB Commercial Finance to smaller boutique lenders.

We can give you independent and free advice about sources of funding. This is because we are entirely independently owned and our fees come from the funders. We are structured in such as way that our expert advisors can give you impartial advice, which means they focus on your needs.

Your continued success is important to us because we focus on building long term relationships with our customers.

So if you are looking for finance to bridge the cash flow gap why not get in touch with us today?

How much cash could you release from unpaid invoices? Compare factoring quotes instantly online >>


Also in this section:

Explore Further

How much could you save
with Invoice Finance?

Try our real-time Invoice Finance
Fee Calculator for instant costs

Touch Financial Rated 4.9/5  based on 83 customer reviews.
See reviews here »
Call Us Email Us Live Chart