10 Reasons to love a Cash-Flow Budget

  1. Highlight changes in your monthly Income  Expenditure and adjust accordingly
  2. Predict periods of excess of Expenditure over Cash on hand. Consider Short-Term Credit.
  3. Predict periods of excess of Cash over Expenditure. Consider paying bills early or bulk buying to avail of discounts.
  4. Can be shared with a Bank Manager to increase the likelihood of obtaining Credit.
  5. Can be used to manage the finances of a particular project in your business to deliver outputs within Budget.
  6. Facilitates making major purchases for your Business. Decide between using available cash or Hire Purchase.
  7. Can be adjusted monthly. Provides you with better consciousness of your Business Finance overall.
  8. Encourages conservative spending and borrowing habits. Do you really need that Company Credit Card?
  9. Comparing estimates over actuals gives you further insight. Need to put more pressure on your Debtors?
  10. Gets you thinking of next year’s Finances, this year. Learn from your mistakes!

 How to build a Cash Budget using Bullet’s free template:

  • Step 1: Do a bank reconciliation. This process identifies any cheques that have not been cashed and Bank charges etc. This gives you your opening cash balance of Cash On Hand. Enter this into the cell highlighted blue
  • Step 2: Fill in actual and estimated income streams. Be as conservative as possible with your estimates.
  • Large transactions like a Directors loan can be used in the month they are received or spread out over the year.
  • Step 3: Fill in actual and estimated Expenses streams. It’s best to slightly overestimate items like Light and Heat. Increases are often applied to these during the year.
  • Step 4: Opening cash +plus Income -minus expenses gives you your closing cash at the end of the month. This is also your opening cash for the following month. The template keeps track of this for you automatically.
  • Step 5: Replace your estimates with actuals each month, and adjust future month’s estimates accordingly for fluctuations, price increases etc. Constant monitoring means you can react to problems and take advantage of opportunities as they arise.

Here’s an example of what a Cash-Flow Budget may look like.

Example Cash Budget



Here’s what you may gleam from this example.

1) Cash on hand in January was negative. They must have been aware of this in December which gave rise to the Directors loan.

2) The healthiest month appears to be December. Which means decisiveness and close monitoring have paid off.

Don’t forget to compare your Cash Budget to your Income and Expenditure account!

The Cash Budget is a running total of your Cash receipts and Expenditure. The Income and expenditure account shows these figures month by month.

Spot the difference:

Income and Expenditure Account Sample

These are the exact same Money in and Money Out numbers but without the running total. You can see that there are a number of months where the money out exceeds the money coming in for that month. If you have too many months like this and the trend looks set to continue you’re cash health is in trouble. Pull back on spending and work harder at getting paid.

This guide assumes your Accounting Year is Jan 1st to Dec 31st

We love to share! So here’s the template we designed: Bullet’s Template for Income And Expenditure Account and Cash Budget all yours for free. If you need more info on it, drop us a mail: hello@bullethq.com



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