Introduction of cash budgeting
Cash budget is a inputs and outputs of a business or a individual over a long period of time (e-conomic, 2013). A cash budgeting is relate to a organisation’s plan to plan ahead and to plan ahead of the future in a company. It usually expressed it as numbers of cash budgeting. The main objective of preparing cash budget is to ensure that the cash is sufficient for the purpose of capital or revenues expenditure. It is also to have cash in advanced in the case of shortage of funds (Fundamentals of financial management,pg32). Having a cash budget is a important factor as it allows the company to have targets sales, minimize the loss in a company and to earn maximum revenues. It also allows the company to manage their business as well as to compare the sales between the actual and the budgeted sales (TheTimes100, 2013). Therefore, I am very much agree that without cash budgeting , management of any business will be be ineffective and will have no aims to improve further.
Advantages of using cash budget
The advantages of using cash budget in our daily life or a business allows you to spend within your limits, forcing you not to overspent it and not incur debts (eHow,2013). The main purpose is to compel planning and allocations within the organization. Planning is a very important task for a company to excel. It forces every team’s managers to look ahead, plan ahead , anticipate what is the problems in long term run, and to help achieve the goals in the company. In order to achieve the organisation’s goals, budgets will have the strategic and tactical plans such as long term planning and advertisting or marketing. Beside planning, communication and coordination are also important as each team members will be able to contribute ideas and plans within each other. Management will be able to give instructions to all the team members for achieving individual or as a team’s goals. As budget is established, top management feel that they...
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