Sample Cash Budget for Small Businesses

You could think of a budget as a “record in
advance,” projecting future inflows and out-
flows for your business. A budget is usually
prepared for a single year, generally to cor-
respond with the accounting year. It is then
broken down into quarterly and monthly pro-
jections.

There are different kinds of budgets, in-
cluding cash, production and sales. A cash
budget, for example, forces the firm to think
ahead by estimating sales and expenses for a
particular period of time. Once reasonable pro-
jections are made for every important product
line or department, the owner-manager sets sales
and expense targets for employees. You must
plan to assure a profit. And you must prepare a
budget in order to plan. A sample cash budget
is shown below.

Sample Cash Budget

Expected Cash Receipts:
1. Cash sales
2. Collections on accounts receivable
3. Other income
4. Total cash receipts

Expected Cash Payments:

5. Raw materials
6. Payroll
7. Other factory expenses (including maintenance)
8. Advertising
9. Selling expense
10. Administrative expense (including salary of
owner-manager)
11. New plant and equipment
12. Other payments (taxes, including estimated
income tax; repayment of loans; and interest)
13. Total cash payments
14. Expected cash balance at beginning of month
15. Cash increase or decrease (item 4 minus
item 13)
16. Expected cash balance at end of month (item
14 plus item 15)
17. Desired working cash balance
18. Short-term loans needed (item 17 minus item
16, if item 17 is larger)
19. Cash available for dividends, capital cash
expenditures, and/or short investments (item 16
minus item 17, if item 16 is larger than item 17)

Capital Cash:

20. Cash available (item 19 after deducting divi-
dends, etc.)
21. Desired capital cash (item 11)
22. Long-term loans needed (item 21 minus item 20,
if item 21 is larger than item 20)

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