Budgeting

8. Actual Cash

8.1 How does your month-end cash balance compare with your forecast balance?

8.2 What caused any differences?

• Was turnover different from budget?
• Were costs different from budget?
• Was the timing of cashflow different? For example, did customers delay payment longer than you had budgeted for?

8.3 Change your future cash budget to reflect any timing differences.

• For example, if sales were as expected, but a large customer delayed payment, you must increase the forecast incoming cash for the month in which you now expect to be paid.

8.4 Keep changing your future cash budget to reflect the actual cash balance.

• For example, suppose you have budgeted for an overdraft of £2,000 at the end of September, and £10,000 at the end of October. But at the end of September, the actual overdraft is £2,500. If nothing else has changed in the October budget, you should now budget for an overdraft of £10,500 at the end of October, £500 more than previously budgeted.