Cash Budget
Categories: Company Management, Accounting, Metrics
Even with credit cards, debit cards, Paypal and one-click online shopping, you've probably still got a few bucks in your wallet. But you need to know how much is in there. That's basically a cash budget. With a carefully prepared cash budget, a company can immediately track cash flows to determine whether there will be enough cash on hand to cover expenses.
Usually prepared weekly, you could also do a daily cash budget if you are really watching your pennies. Or if you are less OCD, you can do a monthly, quarterly and annual versions.
Hopefully, your company has enough cash for all expenses. However, if you subtract cash expenses from your sources of cash revenue and see a shortfall, then you might need to take out a loan or use a line of credit with a bank. Or increase sales and collections, decrease the dividends paid to shareholders, or postpone paying bills if you can. A sample of a cash budget can be found here.
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Finance: What is a Budget?43 Views
Finance a la shmoop what is a budget? that's that thing you throw right out [Woman throws budget out the window]
the window just before you start doing all your Christmas shopping
right but generally it's a plan that lets you see where your money will be
spent if you have a personal budget well you'll be able to decide ahead of time [Personal budget example]
how much money you'll spend on clothes, food, megaphones to annoy and anger your
neighbors and you know whatever floats your boat if you own a company well
you'll probably have much more complicated budget for things like
advertising and lawyer fees either way the plan helps you make sure that you
have enough moolah for everything you need and maybe some leftover for stuff
you want.....Joan wants to control her money so she decides to set up a budget for [Joan setting up a budget on a laptop]
next month she makes a thousand bucks from her summer job and well here's what
her budget looks like.....
Now Joan knows exactly where every penny is gonna go she's not [Joan driving a car]
gonna be caught off guard by any surprise expenses she's not gonna spend
$200 on safecracking equipment and then realize she doesn't have enough left [Joan stood beside a vault of gold bars]
to pay her phone bill although if she does get hit with some unexpected
expenses well hopefully yeah she can just pawn some of those exotic vases she
took from the Peterson place [Joan holding a vase]