A cash outflow falls under this category if it is for the purchase of inventory items resold to your customers, or for inventory items used to manufacture an end product. This category includes all your cash outflows for expenses included in your cost of goods sold. If your business is a retail business, your largest cash outflow is probably for the purchase of resale items. If your business involves manufacturing goods, a large portion of your cash outflow may fall into this category if you purchase raw materials and other goods used in manufacturing your final product. If you have a service-related business, it's likely that only a small amount of your cash outflow will fall under this category.

Predicting the cash outflows in the cost of goods sold category can be a little tricky, but not impossible. The best way to complete your cash flow budget with your costs of goods sold is to base the amount of your cost of goods sold on your sales forecast. This prediction is based on a simple relationship — in order to achieve a certain level of sales, your business will have to incur a corresponding amount of cost of goods sold to support it. Using sales information and the cost of goods sold information from prior years should allow you to determine this relationship, and express your cost of goods sold as a percentage of your sales. Industry information may be available for your type of business if you don't have prior sales and cost of goods sold information to work with. This information may serve as a starting point for predicting your costs of goods sold.