Cash budget

Cash budget translates accrual-based operating plans into a period-by-period schedule of actual cash movements.

Also known ascash flow budget

ByHoang TruongUpdated June 30, 2026

FrameworkMaster budgeting

See it move

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A waterfall opens with €12,000 of cash at the start of the period, adds collections of €95,000, then deducts materials payments of €42,000, labour payments of €18,000, and overhead and selling and administrative costs of €20,000, leaving closing cash of €27,000. The chart demonstrates that the timing of cash receipts and payments can differ substantially from the period's accrual-based revenue and expense figures.

Where it fits

SubjectManagerial AccountingCoreTopicBudgeting & the Master BudgetCore

The formula

LaTeX

CB_{close} = CB_{open} + R - P

Variables

$C B_{c l ose}$: Closing cash balance (€)
$C B_{o p e n}$: Opening cash balance (€)
$R$: Total cash receipts in the period (€)
$P$: Total cash payments in the period (€)

The cash budget tracks when money physically moves, independent of accrual-based income timing.

LaTeX

Surplus = CB_{close} - CB_{min}

Variables

$C B_{c l ose}$: Closing cash balance (€)
$C B_{min}$: Minimum required cash balance (€)

A negative result signals a financing need; a positive result may indicate an investment opportunity.

Check yourself

PracticeCORE

A firm opens April with a cash balance of €12,000. During April it collects €45,000 from customers and pays out €52,000 for materials, wages, and overheads. The firm requires a minimum cash balance of €8,000. What is the closing cash balance, and does a financing need exist?

Select an answer to check your understanding.