free small business advice & information

Article Index
A Start-up’s Guide to Budgeting
Sales Budget
Expenditure Budget
Cash Budget
Balance Sheet Projections
Preventive Measures
Keep Up to Date

A Start-up’s Guide to Budgeting

How do I draw up a cash budget?

When you have created your sales and expenditure budgets, you can use them to create a cash budget – this is a consolidated budget that will predict your actual cashflow month-on-month. To create a cash budget, you should take into account:

  • Timing. Look at when you actually expect to be paid for sales, and the dates you will have to pay out costs such as staff salaries and office rent.
  • Bad debts. In certain sectors, you should try and account for a certain amount of sales that will never be paid for.
  • Additional incomings and outgoings. In addition to sales and expenditure, take into account other money your business will be receiving and paying. This might include:
    • Tax payments
    • Finance (such as investments or grants)
    • Capital expenditure
    • VAT payments

Using the information you have gathered, look at your current bank balance and work out how much cash you will have at the end of each month, working sequentially.

Labels: Reduce Costs