What is a Cashflow Budget?It is a forecast of how your business will earn and spend money during an upcoming period. As you prepare your cashflow budget, you must determine how much it will cost you to run your business during the period it covers, how much you expect your business to take in, and how you will make up for any shortfall. Developing answers to these questions helps you to stay a step ahead of potential difficulties, and it may prompt you to ask important questions that could guide you as you plan for the future of your business. |  |
| Use your cashflow budget as a tool, it is virtually inevitable that your day-to-day financial activities will not precisely conform to your cashflow budget simply because it is impossible to predict the future. The process of comparing your actual income and expenses with the numbers that you project in your cashflow budget provide you with the opportunity to evaluate your expectations and take a close look at your assumptions. Budgeting and performance evaluation are forecasting tools that can prepare your business for upcoming events such as infrastructure upgrades and new product introductions. |
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