Cash inflow is a stream of revenue that comes from investing, sales or obtaining financing. Some examples of cash inflow are collecting payments from customers, receiving donations or gifts, selling property or machinery, and taking a loan from a bank or investor.
Cash inflows can be used in a cash flow statement to evaluate the financial health and stability of a business. In such a statement, the outflows are subtracted from the inflows to determine how much cash the business has available over the reported period. In order for a business to survive, it must have a positive cash flow, or it eventually becomes a candidate for bankruptcy.
Cash inflows allow a company to buy materials, research and develop new products, and conduct the rest of their daily business activities. Investors use cash flow statements to help determine if a business is worth investing in by evaluating the long-term trends of how the company earns and spends its money. This information provides extra context into the risks and potential rewards of any investment.
Cash flow records can show historical information, or they can be forecast into the future as an expectation of what a business plans to receive or spend in a given period.