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Cash budgets are prepared for a period of a month. In addition to monthly cash budgets,...

Cash budgets are prepared for a period of a month. In addition to monthly cash budgets, where else should business managers look to ensure cash is available for paying bills as they come due throughout the month?

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Answer #1

Apart from cash budgets the business managers can take the following measures to ensure that cash is available at all times for paying bills:

A) A cash flow projection can be taken from finance department which usually pays the monthly bills to ensure that at least the recurring transactions are well provided for in advance.

B) Inter departmental collaboration should be done where in the user department should be contacted to receive inputs about any exceptional activities and the expected time when the bill shall be received.

C) The accounts payable aging should be monitored and high aging items should be acted upon.

D) The open purchase orders should be monitored constantly to know the liabilities which may ensue in the upcoming period.

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