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Cash flow represents the flow of cash earned and spent in a company. This pattern reveals how much money is available in a company at a given time. A company’s cash flow is calculated by subtracting the operating earnings figure from the capital expenditures figure.

There are many different factors that can affect cash flow. Here are some factors that might affect the cash flow in your business:

• Overhead expenses and indirect costs. If the price you are paying for your overhead exceeds the money you are bring in then this can become quite a problem as it will definitely limit your cash flow.
• A decrease in prices and payment performances of customers. When there is a decrease in prices it will obviously affect how much money you have coming into the business, as will customer performances. Although a decrease in prices will likely bring in more customers, customer performance can also affect a company’s cash flow; especially poor performance.
• Poor credit ratings with customers. Well, if they’re paying with poor credit it’s likely that they won’t be able to pay the money back which can set you back quite a bit, especially if you have numerous customers buying on credit.
• The economy. If the economy happens to go into a recession then businesses everywhere are going to suffer and cash flow will suffer greatly as well. The economy plays a large role in the amount of cash flow a company brings in.

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Tags: Cash Flow, Expendature, Factor, Money

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