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Credit Cards and Cash Flow
Credit Cards, Invoices and Cash Flow

Credit Card transactions will affect your cash flow. How you use your credit card will determine how you cash outflows will be affected. Your cash outflow on your Cash Flow Report should be the amount you pay on your credit card each month. How much you pay on your credit card could be determined by many factors.

Some start-up businesses rely heavily on their credit cards to operate their business. When cash is tight and there are more cash outflows than inflows credit cards can be one form of financing to keep your business operating. When using credit cards as a financing tool not all expenses will be entered into your Cash Flow Report only the actual cash outlays. Future cash outflows can be projected to pay down the credit card debt.

When carrying a balance on your credit cards you will have monthly interest that will also affect your financial situation. Interest expense will affect your financial statement however it won’t affect your cash flow unless it is being paid as interest is just one more expense to account for.

You may be incurring many expenses but have very little outflow of cash when relying on credit cards. In the future you will have higher cash outflows in relation to expenses when paying down your credit cards. Regardless of how many expenses you have used your credit card for only the actual payment to your credit card will affect your current Cash Flow Report.

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