CASH BUDGETS

INTROUCTION TO CASH
BUDGETS
A cash budget is an estimation of the cash flows of a
business over a specific period of time.
The cash budget provides a company insight into its
cash needs (and any surplus) and helps to determine an
efficient allocation of cash.

A cash budget is an estimation of the cash flows of a

business over a specific period of time.
The cash budget provides a company insight into its cash
needs (and any surplus) and helps to determine an
efficient allocation of cash.
 STE
PS
1. The first step to creating a cash budget is to establish reliable forecasts of the company's cash
inflows and outflows.
2. A cash budget should take into account expected cash flows, such as revenue, as well as operational
outflows due to returns, payroll, rent, utilities, supplies, and other costs of running the business.
3. Analysis backed by cash budgets depend on the time frame for which the budget is being prepared. A
short-term cash budget of a few weeks will only account for day-to-day expenses related to funding
and supplying a company's operations, while a cash budget for a quarter or longer might also
account for larger expenses like equipment, capital investment, and corporate taxes. In each case,
any remaining cash surplus at the end of one budget period will be carried on to the beginning of the
next.
4. Analyze Inflows and Outflows.
BENEFITS OF CASH
BUDGETS
• Is easy to understand

• Prepares you for unexpected expenses

• Makes it easy to manage cash flow

• Helps determine what to borrow

• Predicts future cash needs

• Helps avoid overspending