What are cash inflows and outflows?

What are cash inflows and outflows?

Money needs its own control too

Every business lives with two realities that are not the same thing: the merchandise in the warehouse and the money in the cash register. Merchandise is controlled through the inventory card and stock levels; the physical cash that comes in and goes out is controlled through the cash module. Cash inflows and outflows are precisely the documents that record that flow: a cash inflow records money coming in, such as a cash sale, a customer payment on account, or a loan received, and a cash outflow records money going out, such as paying a utility bill, buying supplies, or an owner withdrawal. Without that pair of records, nobody could say with certainty how much cash the business has, where it came from, or what it was spent on.

In Kardex Tauro, cash works as a chronological book of cash movements: every transaction that touches money is recorded with its date, concept, the third party involved, its amount, and the document that originated it, and the program keeps the balance updated after each movement. Some movements are born automatically, as a consequence of a sales invoice or a payment of an account payable; others are created by the person in charge using the New Cash In and New Cash Out buttons in the Cash window. This article explains what each document is, which fields it has, how it relates to accounts receivable, accounts payable, sales, and third parties, and why cash and the inventory card are separate controls that should not be mixed.

Cash inflow: when money comes in

A cash inflow is any movement that increases the business's available cash balance. In the system there are two ways a cash inflow is born. The first is automatic: when a sales invoice paid in cash is finalized, the program automatically records the cash inflow for the amount received, and when a customer pays all or part of an accounts receivable balance, the money also enters cash automatically. The second way is manual: the New Cash In window is used to record money coming in that does not come from sales or collections, that is, cash that arrives for other reasons.

Typical cases of a manual cash inflow are:

• Capital contributions: contributions by partners or owners, capital injections for operations, and contributions to buy assets.
• Loans received: cash loans from financial institutions, third parties, or suppliers, and advances received from customers.
• Recoveries and reimbursements: refunds of expenses paid earlier, recovery of money lent to employees, and return of deposits or guarantees.
• Sale of assets: cash sales of used equipment, furniture, machinery, or company vehicles.
• Other income: income from non-inventory services, insurance claims, occasional gains, and any other cash receipt not related to selling products.

The rule is simple: if the money came in from a cash sale or from collecting an account receivable, it is not typed here, because the system already recorded it from the sales invoice or the payment document. The manual inflow window is reserved for money that arrives outside those processes.

Cash outflow: when money goes out

A cash outflow is any movement that decreases the available cash balance. It also has two origins. It is automatic when an account payable to a supplier is paid in full or in part, because the money leaves cash at that same moment, and also when a warehouse consumption is paid in cash. It is manual when the New Cash Out window is used to record outflows that do not come from those automatic processes.

Typical cases of a manual cash outflow are:

• Operating expenses: payment of utilities such as electricity, water, telephone, or internet, payment of store rent, cash payroll, and cleaning or maintenance services.
• Administrative expenses: office supplies, stationery and photocopies, courier or transport, and representation expenses.
• Withdrawals and loans: partner or owner withdrawals, cash loans to employees, and payroll advances.
• Small purchases: minor assets paid in cash, non-inventory supplies, and small repairs.
• Miscellaneous payments: taxes, fines or penalties, donations, and tips.

Before accepting an outflow, the system checks that the current cash balance is enough to cover it; if it is not, it shows an error with the available balance and does not allow the outflow to be recorded. If the money leaves because of a payment to an account payable or a consumption paid in cash, the record was already generated from the corresponding window and should not be repeated by hand.

The cash document: third party, concept, amount, and date

Both the manual inflow and the manual outflow are recorded in nearly identical windows, which are each other's counterpart and share the same layout of fields. The structure of the document is as follows:

• Document number: a running number the system assigns when the movement is accepted, read-only, which identifies the cash receipt (inflow) or the cash voucher (outflow) that can be printed afterwards.
• Type: shows the word INFLOW or OUTFLOW as applicable; it is set automatically when the window is opened from the corresponding button.
• Third party: the person or entity that gives the money (in an inflow) or receives it (in an outflow). It is required, it is chosen with a picker that opens the third-party list, and it can be a partner, a bank, a customer, a supplier, an employee, a utility company, or any other registered person.
• Concept: a required text that describes the reason for the movement, for example Partner capital contribution, Bank loan received, Electricity bill payment, or Office supplies purchase. A clear concept makes later reconciliation easier.
• Amount: the value of the movement, always a positive number greater than zero; in an inflow it is added to the cash balance and in an outflow it is subtracted.
• Date: the day the movement happened; by default it takes the current date and can be adjusted, for example, to record movements from previous days.

When the Accept button is clicked, the window validates that all required fields are complete, creates the movement, updates the balance, and generates the printable receipt or voucher that serves as proof. An important security feature: there is no delete button in cash, because deleting would break the traceability of cash. If a mistake is made, it is corrected with an opposite movement: an outflow to correct an erroneous inflow, or an inflow to correct an erroneous outflow, and both records remain in the history.

What each movement generates and which windows it connects to

The Cash window shows all movements in chronological order with columns for date, type, concept, third party, amount, resulting balance, and source document. Every automatic movement keeps its link to its origin: from the context menu you can use the View Source Document option to open the sales invoice or the payment that generated it, and you can also export the list to Excel, generate a printable report, apply stackable filters by type, third party, concept, amount greater than or less than, and date greater than or less than, remove filters, edit notes, and configure the visible columns. This combination of filters with the View Report option makes it possible to obtain, for example, the report of all inflows of a period, of the outflows for a specific concept, or of the movements of a single customer or supplier, without needing additional modules.

The connection with the other windows is direct: cash-sale invoices feed cash with inflows; payments from the accounts receivable list do the same; payments from the accounts payable list generate outflows; warehouse consumptions paid in cash generate outflows; and the third-party list provides the names of customers, suppliers, and other people who appear in the movements. The following table summarizes the typical origin of each type of movement:

Cash controls money; the inventory card controls stock

A frequent doubt is whether cash movements move inventory. The answer is no: they are separate controls. When a cash-sales invoice is finalized, the program does two different things in parallel: it subtracts stock from inventory, because the sales invoice is an inventory-card document, and it records a cash inflow for the amount received, because the sale was paid in cash. In contrast, a manual outflow to pay an electricity bill takes no unit out of the warehouse: it only reduces cash, and a manual inflow from a partner's loan adds no merchandise either. Cash controls money; the inventory card controls stock.

Inside the Accounting module of the program, which groups accounts receivable, accounts payable, cash, and third parties, cash is the submodule in charge of the cash received from sales and the cash used for payments: it records cash inflows and outflows, controls the balance in real time, supports cash counts, and generates movement reports. It is worth being clear about its scope: this module does not generate complete accounting entries and does not produce financial statements, and it does not handle accrual accounting; it records cash flows and balances for day-to-day operational control. That is why, in Kardex Tauro, cash movements are fed by inventory operations and should not be recorded twice, and the formal accounting of the company, with its books and reports for regulatory authorities, is handled with a complementary professional accounting program.

The daily mini cash count: opening balance plus inflows minus outflows

A cash count compares what the system says should be there with what is actually in the physical cash drawer. The formula is simple: opening balance of the day plus the day's inflows minus the day's outflows equals the expected closing balance. That expected balance is compared with the physical count of bills and coins. Here is an example with the movements of any given day in a store:

If at the end of the day the physical count matches the $770,000, the cash drawer is balanced. The running-balance column, which the program calculates after each movement, lets you follow the operation step by step and detect at which point a difference appeared if the count does not match.

How to balance the cash drawer at closing time

Closing the day becomes a routine of a few minutes when you follow these steps:

1. Review the day's movements: in the Cash window, apply date filters for the day being closed, and a type filter if you want to see only inflows or only outflows.
2. Generate the supporting document: with the filters applied, use View Report to obtain the printable report of the day, or Export to Excel if you prefer to work with the information outside the program.
3. Count the physical cash: add up the bills and coins in the drawer and compare them with the closing balance the system shows for the day.
4. Confirm the balance: if the count matches the balance, save the day's report as proof of the cash count.
5. Investigate the difference: if it does not match, review movement by movement; the View Source Document option opens the invoice or payment that originated each record, and notes help recall details of manual movements.
6. Correct recording errors: since movements cannot be deleted, a mistyped amount or concept is corrected with an opposite movement that leaves a record of both the error and its correction.
7. Review the physical supporting documents: if the difference persists, check the invoices and receipts of the day's outflows and the change given, and repeat the count before concluding.

To make the count reliable, adopt simple habits: record manual inflows and outflows at the moment they happen instead of accumulating them, use descriptive and standardized concepts for recurring movements, print the receipt or voucher of important movements with the View Receipt button, keep the physical supporting documents of outflows for future audits, check the balance periodically to make sure there is enough cash to operate, and restrict with permissions who can create manual inflows and outflows. Cash does not forgive carelessness: when it is kept up to date, each day's count takes minutes and any difference is detected in time, before it becomes a bigger problem.