Cash budgeting

Budget

A forecast of future events expressed in quantitative terms.

Template

A spreadsheet including three worksheets for recording cash budget information including documentation, input/assumptions and report.

Input worksheet

Also known as the assumptions worksheet contains all the necessary data required for the report to be completed. All data is linked to the report for calculations in the statements and the cash budget.

Cash budget

An internal control that forecasts the expected receipts, expected payments and anticipated cash position of a business over a period of time.

Memorandum report

An internal document used to report to management the cash budget. It will include analysis and interpretation of the current and future viability of the business and make recommendations for improvement.

Step 3

Calculate the cash balance.

Step 2

Determine expected payments of cash.

Step 1

Determine expected receipts of cash.

Accrual basis

GST is remitted according to the total sales and purchases regardless of whether the cash has been received or paid.

Cash basis

GST is remitted and claimed only for those amounts actually received (GST liability) or paid (GST reclaimable).

Unfavourable variances

Payments that increase above the budgeted amount.

Favourable variances

Receipts that increase above the budgeted amount.

Viability

The ability of the business to meet its current and future cash commitments.

Variance

The difference between a budget figure and an actual figure.

Payments of cash

These include cash purchases, accounts payable, GST liability, and other payments (expenses and asset purchases).

Receipts of cash

These include cash sales, accounts receivable, GST collected, and other receipts (revenue and asset sales).

Controls

These include: accountability for performance of the activities of the business, evaluation of each of the activities, identification of the causes of variances, and implementation of action necessary to rectify any undesirable trends.

Aims

These include: plan, analyse, control and evaluate the cash position of the business.

Report worksheet

This sheet contains the statements of receipts and payments, the statements of GST reclaimable and liability, and the cash budget in an appropriate layout ready for printing. All data used is linked to the input worksheet.

Documentation worksheet

This sheet is the last completed and includes the name and scope of the reports in the workbook. It includes the creator's name, date, time, any adjustments made and instructions for users of the spreadsheet.