Cash Flow Budget- The Potent Tool for Any Business
The cash flow budget reflects the fact that you have sufficient amount of money at the end of the month to meet the daily day to day expenses. In a way it is a methodological statement which reflects the incomes as well as the expenses over a period of time. To sum it up, in a way it can also be referred to as the opening budget in certain categories. A cash flow statement depicts the monthly capital requirement of a company. In certain months the company may not have sufficient amount of cash to meet the day to day expenses. If the cash flow statement at the end of the month shows that there is a shortage of cash in any month you need to find the reasons behind it. The prime utility of a cash flow budget is the amount of cash that has to be taken out from the bank to pay the debtors. On the other hand it also tells the story of the amount of cash which is received from the customers as well. If things could be put in right perspective, cash flow budget is a little difficult to calculate as certain uncountable factors are to be considered in calculating.
Establishing a budget in the first place
To consider the costs of start up of a business, one has to consider the operating costs. One has to frame a budget in the first place. Establishing a proper cash flow budget depends on the type of company you want to set up. On all counts it is suggested that during the start up phase of the business, to try and keep the expenses to the minimum as you will be paying from your pockets. An example will drive home this point on a better level. If one wants to start a small consultancy firm then a computer along with a telephone connection is more than enough. It is assumed that one has the educational skills to run the business from their home. On the other the opposite situation arises when one needs to set up an electronic firm. In this regard they would need production building, packing materials as well as cost of equipments. The expenses in this regard would run into millions. So a careful mix and match needs to be done.
For a cash flow budget to be prepared a careful analysis of the various aspects of the business needs to be done. Budgets are prepared with the future in mind. It states a path in which the objectives of the business can be achieved. However it must be mentioned that in preparing the budgets the past information is needed and then only one can observe certain trends and take corrective action. In simple terms budgeting means the cost of setting up the business as well as the day to day costs in running up the business. This factor is very important for all entrepreneurs of any kind of business. Quite a few people confuse the fact that budgets can only be prepared by the accountants, but the reality presents a different picture altogether, as budgets can be prepared by anyone. It is a case of multiplication as well as the addition of figures. In simple terms it means to add all the expenses as well as the incomes together. Normally it can be prepared in a simple document as well as a spreadsheet. But in recent times it must be admitted that budgeting software has come up in a big way.
What is cash flow Mojo
For the cash flow budget to be accurate, the need of the cash flow mojo is of paramount importance. It is a tool for the business owners to determine whether their finances are in order and to make the business profitable as well. It needs to be mentioned that it is an effective tool for medium and small scaled enterprises. In this software the budgeting module is integrated with the cash budget module and focuses on quite a few areas. Firstly, it points to the fact on how much cash flow is needed in a week. Secondly, it points to the fact on how to calculate the weekly income and how to put that into practice to clear the debts. Thirdly, it helps to highlight those areas where expenses can be reduced without harming production as well as sales in a particular way. In the final analysis it helps you to organize the expenses of the company so that it becomes profitable on all counts. No module is complete without the effort of individuals and one needs to have interactive sessions in place. In this regard the company offers a host of features.
User friendliness of cash Mojo
So, on all counts it is clear that for cash flow budget, cash flow mojo is a vital tool. If one enrols in the program they are encouraged to participate in the discussions. If one is having any difficulty with the software then they can contact the company directly and all their queries will be taken care of keeping their confidential details. As soon as one enrols for the program a step by step guidance is provided on how to go about things. This helps the users in becoming friendly with the software on all counts.