This lets the business control cash flow pay bills

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to various departments so that expenses are dealt with accordingly. This lets the business control cash flow, pay bills routinely, and track all savings, investments, and expenses. If a business does not set a budget accurately, then unnecessary overspending is highly possible. Similarly, an inaccurate budget can also lead to restrictive allowances for where they are needed most. The budget can be broken down into two categories, the operating budget and the cash budget. The operating budget includes funds for manufacturing expenses, selling and administrative costs, sales, labor and materials. The operating budget is usually set on a yearly basis and can vary depending on how the expenses change (Sherman, n.d.). The cash budget, on the other hand, has to do with the cash in-flow and out-flow of the business. This means that all income and expenses are considered in calculating the cash budget. This can include income that is not yet collected, such as accounts receivables. Zero-based budgeting is the process of creating a new budget without the consideration of previous budgets. The new budget would essentially start off at a zero balance and would be built from the ground up (Investopedia, n.d.). If a business implemented zero-based budgeting, then it
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  • Spring '13
  • Miller
  • Business, Cash Budget, budgeting process

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