Purpose of a Cash Budget

• Let managers compare actual budgets with planned budgets and if there any differences they can analyse why.
• Highlights periods where a negative cash flow is expected and take corrective action in advance of cash deficits.
• They can show periods of surplus cash which would allow them to plan future purchases and be used for capital investment.
• Highlights when expenses are high so you can take action.
• It can be used to give departments/managers a budget/target to focus on.