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Cash Flow Budget

What is a cash flow budget?

Definition of cash flow budget

Often referred to as a cash budget or a cash flow, the cash flow budget allows a company to keep on top of cash income and outgoings over time. 

In business, cash is king. To future-proof commercial success, you need to know where cash is coming in and where the money is going out.

Cash flow budgets differ from profit and loss accounts as they take into account things like inventory, debt, and new equipment, which is why they are vital even for a highly profitable business to map out.

General FAQ

What type of data should be included in a cash flow budget?
Your cash flow budget should include data on payments for loans, taxes, tax refunds, and sales forecasts. It’s an estimate of all cash spending, predicted for a specific period.
Why is having a cash flow budget important?
In business, cash is king! A company can survive a long time without profit. But with no cash? You’re in big trouble. A cash flow budget encourages you to think about whether you’ll generate enough income to meet financial requirements, creates a comparison point for actual cash flow, and gives you crucial information to discuss payment intentions with lenders.

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