Three important aspects of cash management within companies (Cash budgeting, Working Capital Management and Credit Control, and Treasurership and Capital Budgeting) are outlined below:

Cash control - Cash budgeting

The object of cash budgeting is to ensure the company has accumulated sufficient cash at the right time in order to pay its bills (remain liquid). This will involve forecasting all cash-flows with external parties:

Sales receipts will be based on sales forecasts, and will allow for a lag to allow for Debtors to pay their bills. This will be based on past experience - typically 1-2 months.

Material purchase expenditure will be based on production schedules (derived from the sales forecast but adjusting for stock changes and lead time) and will allow for a credit period before payment is made (depending on company credit control policy).

Direct labour costs will be estimated based on the production schedule.

Overhead expenses will be estimated based on past expenditure, adjusted for any systematic variation with production or sales volume.

Unusual cash requirements for major investment purchases, tax payments, dividend payments, loan repayments etc. will be forecast.