← Lessons 05-Financial Management Techniques
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1. Introduction 2. Definitions of Key Financial Terms 3. Sources of Funds 4. Uses of Funds 5. Trading and Profit & Loss Accounts 6. Balance Sheet 7. Legal Requirements 8. Balance Sheet Terms and Ratios 9. Budgeting 10. Cash Flow 11. Cash Budgeting 12. Stock Control 13. Conclusion 14. Final Memory Checklist

11. Cash Budgeting

  • Cash budgeting forecasts future receipts and payments.
  • It shows how much money is expected to be available or required in each period.
  • Can be prepared using a spreadsheet or planning chart.
  • Helps plan purchases when cash inflow is strong and identify future shortages.
  • If a shortfall is forecast, options include increasing borrowing, collecting debtors faster, negotiating more trade credit and reducing direct/overhead costs.
  • Sale-and-leaseback of assets can release cash where appropriate.
  • Factoring invoices can create immediate cash but reduces the value received because the factor charges commission.