Most business proprietors have business goals and aims in their mind. However few prepare formal written and documented budgets of these goals and aims that can be used effectively in driving their business forward.
There is an old saying that cash is king in business. Without cash flow there will soon be no business. The last 2 years of COVID – 19 have brought this message home.
What is a CASH FLOW budget?
A cash flow budget sets out likely future cash receipts/bankings/inflows for the business for certain time frames. For example, sales revenues, capital injections, borrowings, sale of assets etc.
It then matches against likely cash payments/outflows for the same time frames. For example, Owner drawings, business expenses, equipment, loan repayments etc.
The budget will calculate resulting bank balances, positive or negative. You will have a good idea as to whether your cash flow will positive or negative.
Those time frames can be daily, weekly, monthly, quarterly, annually etc.
Is it difficult it to prepare a CASH FLOW budget?
At first it may seem a daunting task to prepare budgets. With the help from your experienced accountant you may be surprised at how manageable the task is.
If you aren’t budgeting in your business, call your accountant now. You need Help.
Copyright 18 February 2022 Rede Accountants