How to Prepare a Monthly Cash Budget
A cash budget estimates cash inflows and outflows for a business for a specific period of time. Monthly cash budgets let you know what your available cash reserves are for a given month so you know if you can meet unexpected needs or take advantage of business opportunities as they arise. The key to preparing a monthly cash budget is to estimate both income and expenses as accurately as possible.
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Instructions
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1
Decide the categories you want to track in your monthly cash budget. Include the beginning cash balance, expected receipts or income, and expected payments. Divide the income and expenditures into subcategories for easier tracking. Make sure to include space for cash sales, account collection and un-categorized income. Also include the cost of inventory, payroll, advertising and administration, as well as unforeseen expenditures.
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2
Figure out what your income is expected to be for the month. Make sure this number is as accurate as possible for the total amount. The subcategories can be less precise, but the overall income must be accurate to calculate the rest of the budget. Use an average of the previous month's income if you are unsure. If there is no income to average, take the expected income and divide by half. Then use that number to keep within your budget.
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3
Figure out what the costs will be for each expenditure category. Find these numbers by looking at previous bills or estimates for bills.
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4
Open up your spreadsheet software to a blank page. Across the top, mark columns for "Item" and for "Amount."
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5
In Line 2 create a beginning cash balance. This is what you are starting with to prepare a monthly cash budget. The cash on hand goes in the "Amount" column.
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6
Skip a line, then type in "Expected Cash Receipts." This is for the income categories. Create a line for each income category. You can be as detailed as you want, depending on how you want to track the income. The last line in this group should be "Total Cash Income" and should be the total amount of money you expect to bring in during the month.
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7
Skip a line, then type in "Expected Cash Payments." This is the money you will be paying to others. Create a line for each expense category. Again, you can be as detailed as you want, depending on how you wish to track the numbers. The last line, as in the step above, should be the "Total Amount" of money you expect to pay out.
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8
Skip a line. Type in "Cash on Hand." Subtract the total expenditures from the total income. This should be a positive number and is the amount you have extra for unforeseen expenses. If the number is a negative, you need to go back through the budget and cut back on expenses or figure out how to bring in additional income.
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