Cash budget

Working capital requirements of a business should be monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of cash. The cash budget has the following six main sections:

1.Beginning Cash Balance - contains the last period's closing cash balance.
2.Cash collections - includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
3.Cash disbursements - lists all planned cash outflows for the period, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc.)
4.Cash excess or deficiency - a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
5.Financing - discloses the planned borrowings and repayments, including interest.
6.Ending Cash balance - simply reveals the planned ending cash balance.