Cash Budget Process

A cash budget shows the cash flow that the firm anticipates in the upcoming period, given various scenarios. This budget goes beyond a simple summation to cash receipts and disbursements. Rather, it attempts to forecast the actual timing of the cash flows into and out of the business. The precision of the budget depends upon the characteristics of the organization, the degree of uncertainty about the business environment, and the ability of the planner to accurately forecast the future cash flows.