TREASURY & CASH BUDGETING

🧭 Cash Projection Pilot

Profits don't keep the lights on—cash does! Forecast cash inflows, schedule supplier disbursements, calculate ending balances, and determine borrowing needs against minimum safety reserves.

Lesson: Master Cash Budget Structure

A comprehensive cash budget maps exact liquid movements, stripping out non-cash items (like depreciation):

Budget Section	Standard Formula	Operational Purpose
Cash Receipts	$\text{Cash Sales} + \text{Collections on A/R}$	Models collection timing (e.g., $70\%$ in current month, $30\%$ next month).
Cash Disbursements	$\text{Direct Materials} + \text{Wages} + \text{Rent} + \text{Taxes}$	Actual cash payouts. Excludes depreciation (non-cash expense).
Net Cash Balance	$\text{Beginning Cash} + \text{Receipts} - \text{Disbursements}$	Unadjusted cash available before bank financing decisions.
Financing Needed	$\text{Minimum Required Cash} - \text{Net Cash Balance}$	Short-term line of credit drawn when balance dips below the safety buffer.

Golden Rule of Cash Budgets: Never include Depreciation Expense in cash disbursements! Depreciation is an accounting allocation of historical cost, not a cash payment.

🧭 Cash Projection Pilot

Cash Forecast Reconciled!

Lesson: Master Cash Budget Structure