Financial planning and cash budgets

Financial Planning

Forecasting future cash receipts, payments, revenues, expenses, and the resulting financial health of a business.

Budget

A forecast expressed in monetary terms. Think of it as a financial plan for the future.

Cash Budget (Cash Flow Forecast)

A budget showing predicted cash IN and cash OUT over a period. It tells you if you'll have enough cash to survive.

Budgeted Income Statement

A forecast of revenues and expenses (profit and loss).

Budgeted Balance Sheet

A forecast of the financial position (assets, liabilities, equity) at a future date.

Scenario Analysis

Looking at best-case and worst-case situations.

Sensitivity Analysis

Analysing what happens if ONE variable changes (e.g. what if sales drop by 10%?).

Limiting Factor

The main thing that restricts a business's ability to grow – usually demand for the product, but could be production capacity.

Credit Sales

Sales where the customer pays LATER (not immediately). This creates a lag between the sale happening and the cash arriving.

Rolling Budgets

Budgets that are continually updated as time passes – not just done once a year.

NTBF - New Technology-Based Firm

A startup based on innovative technology. These are very hard to forecast for.