Cash budgeting

business builder 5

how to prepare a cash budget zions business resource center

zions business resource center

2

how to prepare a cash budget
At its most basic level, a budget is a plan for owners and managers to achieve their goals for the company during a specific time period. In this business builder you will learn the fundamental concepts of cash budgets and how to evaluate your budget on a month-to-month basis.
What You Should Know Before Getting Started
• The Purpose of a Cash Budget • Why Prepare a Cash Budget?

3
3 4

How to Create a Cash Budget
• Time Period • Desired Cash Position • Estimated Sales and Expenses • Cash Flow Budget Worksheet

4
6 6 6 9

How to Analyze a Cash Budget Conclusion Checklist Resources

10 11 11 12

how to prepare a cash budget

3

what to expect
This Business Builder will introduce you to the fundamental concepts of cash budgets and outline the steps necessary for preparing a cash budget for your business. It will also show you how to evaluate your budget on a month-to-month basis. This Business Builder assumes that an income statement and a balance sheet have been prepared for your business. Information from these financial statements are an integral part of creating a budget. Without that information, this Business Builder may not be as helpful as it could be.

what you should know before getting started
The Purpose of a Cash Budget
At its most basic level, a budget is a plan. It is a plan for owners and managers to achieve their goals for the company during a specific time period.
The preparation of a cash budget is an important management task. While some small businesses may be able to survive for a time without budgeting, savvy business owners will realize its importance. A cash budget can protect a company from being unprepared for seasonal fluctuations in cash flow or prepare a company to take advantage of unexpected quantity discounts from suppliers. While there are other types of budgets that can be prepared, such