Get better at managing cash flow by creating three categories: Operating, Investing and Financing. Operating cash flow is the money in the day-to-day activities of your business.

Sales is your big cash inflow that also includes other income, like commissions.

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.

Investing outflows include asset purchases or loans to others. The third and final category is financing. Business loans or lines of credit are examples of financing inflows.

Financing outflows include loan repayment, payment of dividends, or stock repurchases.

If you’re unsure how to define a transaction, create a category called “other” and consult your accountant or advisor. Keeping your cash flow organized is the first step to making it better.

What You'll Learn

This video will show you how to classify the different ways you’re either receiving or spending cash.

Minute Watch

Understand Cash Flow

Types of Cash Inflows and Outflows

Categorizing cash flows will help inform your business decisions and prepare you for engaging with external stakeholders. This video will show you how to classify the different ways to get and spend cash.

Separating cash flows into operating, investing and financing activities is a necessary step to establishing a healthy business model. Click on the next module to solidify your understanding of each category.

For Informational/Educational Purposes Only: The author’s views may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone, and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions, and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.