• A cash budget is a company’s estimate of cash inflows and outflows over a specified period of time, which can be a week, month, quarter, or year.

  • The company will use the cash budget to determine if it has enough cash to continue operating for a given period of time.
  • A cash budget will also give a company an idea of its cash needs and any surpluses, which will help determine if the business is using cash effectively.
  • Cash budgets can be thought of as short-term cash budgets, typically weeks to months in time, or long-term cash budgets, which are thought of as years.
  • The company must manage its sales and expenses in order to achieve optimal cash flow.