Cash budget: plan cash payments to ensure businesses cna pay debts and avoid cash shortage/excess
Cash ensures that the business can pay its debts in the short term and survival in the long term
Enable management to take advantage of investment opportunities
Planning of cash receipts and payments avoid the situation of cash shortage or excess cash using a cash flow forecast
Cash shortage occur due to unforeseen expenses where money needs to be borrowed
Reserves of cash and securities helps the business to avoids sudden shortages or disruptions to cash flow
