How To Create A Cash Budget In Excel

What is a Cash Budget Template?

A cash budget template is a budget based on actual inflows and outflows of cash, as opposed to being based on accounting principles such as revenue recognition Revenue Recognition Principle The revenue recognition principle dictates the process and timing by which revenue is recorded and recognized as an item in a company's , matching, and accruals, which may result in very different numbers. A cash budget is important for personal and business planning What is Financial Modeling Financial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. , as it indicates how much funding is required or how much surplus cash is produced over a period of time.

Cash Budget Template

Example of a Cash Budget Template

Below is an example of a generic monthly cash budget template in Excel that you can download and use for your own purposes.

The template includes several sections:

Cash in from the sale of goods/services
Cash out for expenses
Cash in/out for investing
Cash in/out from financing
Total change in cash in each period

How to Use the Cash Budget Template

In order to make the template work for you, you'll need to make several changes to it. The first thing is to add your company name and change the dates or time periods as appropriate.

Next, change the names of all the sources of inflows/outflows of cash in the operation section and add or remove rows as necessary. Make sure the totals sum up correctly after making the changes.

Following that, add any investing and finance cash flows as appropriate. A common approach is to leave financing until the end and decide if any is required if excess cash may be returned to investors.

Finally, look at the net figures in the final row called "total increase/decrease in cash" and analyze your cash budget. You may decide expenses should be increased or decreased and other changes are required to optimize the budget for your company.

Note: The cash budget template is for educational purposes only and should not be relied upon without professional advice.

Pros and Cons of a Cash Budget

There are several advantages and disadvantages in preparing a budget on a cash basis. Here are some key pros and cons:

Provides precise timing of when cash comes in and out of the company
Gives a clear picture of the net financial position of the business
Challenging to get details about when cash will be received for revenue and when each bill will be paid
Doesn't tie exactly to the income statement

In a perfect world, a financial analyst Financial Analyst Job Description The financial analyst job description below gives a typical example of all the skills, education, and experience required to be hired for an analyst job at a bank, institution, or corporation. Perform financial forecasting, reporting, and operational metrics tracking, analyze financial data, create financial models would prepare an operating budget, a capital budget, and tie everything together in a fully-linked three-statement financial model How the 3 Financial Statements are Linked How are the 3 financial statements linked together? We explain how to link the 3 financial statements together for financial modeling and .

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Cash Budget Template

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Additional Resources

CFI is on a mission to help anyone become a world-class financial analyst. To learn more about budgeting, financial modeling, and valuation, check out the resources below:

Operating Budget Template
How to Link the 3 Statements How the 3 Financial Statements are Linked How are the 3 financial statements linked together? We explain how to link the 3 financial statements together for financial modeling and
DCF Modeling Guide DCF Model Training Free Guide A DCF model is a specific type of financial model used to value a business. The model is simply a forecast of a company's unlevered free cash flow
Financial Modeling Certification Program