FINANCIAL BUDGET

Financial Budget Example

A financial budget outlines the usage of cash throughout the budget period and culminates in the creation of a pro forma (expected) balance sheet and cash flow statement.  Cash budgeting is especially crucial because even a temporary mismatch in cash inflows and outflows can be disastrous for an organization that is otherwise healthy. 

BENEFITS OF CREATING A FINANCIAL BUDGET

A financial budget forces your organization to devote critical thought to its cash flows for the upcoming fiscal year.  This thorough planning will allow your business to address potential issues and make critical decisions well in advance of their fruition.

THE FINANCIAL BUDGET PROCESS

• Determine the timing of cash receipts and payments outlined in the operating budget
• Include the timing and amount of taxes, financing, and any other cash flows
• Compile the pro forma balance sheet, cash flow statement and appropriate ratios

FURTHER READING

These links elaborate on the topic at hand.  They serve as a good starting point for those companies that would like to learn more or would like to address these topics “in house.”  For those firms that prefer to continue to focus on their current responsibilities and would value the objective viewpoint of a professional from outside of the organization, click here.

Cash Flow-In and Out
Excerpt:  “Cash, whether coins, bills or checks is vital to any business both large and small. The movement of cash in and out of that business is truly the lifeblood of the business organization. Managing that cash is critical to the future and success in any type of business.” 

BBB Cash Budget 1F.pdf (application/pdf Object)
Excerpt:  “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…”

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