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The cash budget shows whether, month by month, you have enough money in your bank account to pay your expected outgoings.


External help

The income needed to pay expenses does not always flow in evenly, and this needs to be shown in a cash budget.

Private, startup and operating budgets can be produced relatively easily, assuming you have drawn up a business plan. However, a cash budget is more difficult as it requires someone good at figures to keep an overview of all the items in such a budget.

If you supply the relevant figures and information, your bank or accountant will be able to produce a cash budget for you.


Facts

Cash and cash equivalents covers cash on deposit in bank accounts and cash in hand.


Insufficient cash and cash equivalents

If you have sufficient cash to pay your expenses, everything is okay. However, if you don't, then you need to resolve the problem.

To do so you need to:

  • ensure that your earnings increase
  • grant your customers shorter credit terms
  • ensure that your suppliers give you longer credit
  • postpone or cut some of your expenses
  • arrange a bigger overdraft facility with the bank.
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