Financed Cash Flow is the amount of money borrowed, representing cash inflow that becomes cash outflow when it is repaid with interest over time.

Primary Implication

Another word for financed money is debt.  A lender will finance your cash flow in exchange for principal and interest payments to fund capital expenditures in a business.

All is well should the money you borrow generate more than it costs.  The problem is when any debt-financed asset generates less than the financial obligations tied to the asset.  Don’t put you and your investors at risk by exposing your business to take in less operating cash than the debt cash-out requirements.

Overview

Financed Cash Flow represents money acquired from financial institutions in exchange for principal and interest payments to fund capital expenditures in a business.  It is primarily used to acquire assets and pay financial obligations when available cash exceeds cash-out requirements.  Below are the most common financing options:

• Suppliers and Vendors
• Credit Cards
• Line of Credit
• Installment Loans
• Equipment Leases
• Asset-Based Loans
• Alternative Financing Sources

The problem is when any debt-financed asset generates less than the financial obligations tied to the asset.  Don’t put you and your investors at risk by exposing your business to take in less operating cash than the debt cash-out requirements.