Cash budgets
You'll learn how to prepare a cash budget and forecast your organisation's cash position—a critical skill for ensuring the business can meet its obligations.
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In this lesson
- 0:00 Why cash budgets matter
- 0:48 What is a cash budget
- 2:04 Building a cash budget step by step
- 3:56 Non-cash expenses and timing issues
- 4:43 Worked example: coffee bean sales receipts
- 8:26 Calculating total receipts across periods
About this lesson
This video covers what a cash budget is, why monitoring cash flow matters more than profit alone, and the key steps to building one: identifying opening cash, forecasting cash inflows (from sales and other sources), accounting for payment timing, deducting cash outflows (wages, supplier payments), and calculating closing cash. You'll discover why the timing of receipts and payments is crucial—particularly when dealing with credit sales and credit purchases—and how to avoid the trap of non-cash expenses like depreciation. Through a worked example involving a coffee bean business with changing prices and staggered customer payments, you'll see how to track multiple months of sales receipts and build an accurate forecast that reveals whether cash shortfalls are coming so you can take action before they happen.
Duration: 11m
Transcript
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