Outlay – definition and meaning

An outlay is an expenditure we make to support an activity. It is the total cost of achieving an objective, acquiring something, or carrying out a decision. Put simply; it is the amount of money we spend on something.

For example, the outlay on a new air conditioner would include its buying price, taxes, delivery charges, plus any set up and installation costs.

If I spent $500 on a tree house, including labor, wood, and other materials, that was my outlay.

In accounting, it is common to use the term ‘outlay cost.’ For companies, such costs for new projects include hiring, start-up, and production costs. For ongoing projects, they include salaries, equipment maintenance, and rent.

In economics, the term refers to the sum of all costs plus opportunity cost. Opportunity cost is the value of the best alternative choice when making a decision to go ahead with a certain action. You are thinking about opportunity cost if you ask yourself “If I do this, what will I have to give up?”

Cambridge Dictionary has the following definition for ‘outlay’:

“An amount of money spent for a particular purpose, especially as a first investment in something.”

Do not confuse the term with ‘layout,’ which refers to how we arrange something. The layout of a page, for example, is all about where the writer place words, headlines, images, etc. The layout of a room refers to how we arranged the furniture or designed its dimensions.

Outlay - definition and example
Mrs. Jones spent $500 on a tree house for her children That was her outlay. It included materials and labor.

Cash outlay

Cash outlay, cash disbursement, or outflow is money a corporation pays for its operating expenses.

Companies spend money on a wide range of things. For example, when they sell things they spend money. General and administrative expenses also form part of cash outlays, as do salaries, utilities, and insurance.

In a bizfluent.com article, Marquis Codija says the following regarding cash outlays:

“As corporate expenses, cash outlays are integral to a statement of income, also known as a statement of profit and loss.”