cash budget

• nature of cash budtet?

  Predicts future cash flow peaks and trough

  Enable owner to take advantage of surplus/find funds to fill cash flow gaps

  Prepped on cash basis

  Calc any any period of time as determined by management

  Includes: opening bank balance, estimated cash inflows/outflows and closing bank balance
• importance?

  plan and control future expenditure and develop internal control strategies regarding cash inflow/outflows
• importance?

  plan and control future expenditure and develop internal control strategies regarding cash inflow/outflows

  • close scrutiny of accounts rec to increase collections
  • reduce inventory
  • delay creditor payment
  • locate cheaper suppliers
  • find sources of cash
• advatnages?

  identifies excess cash -> invested

  anticipate liquidity issues and develop prevention strategies

  variance analysis to improve future performance

  supporting document for loan application