What is The Difference Between Budget and Cashflow

Posted by on Dec 27, 2011 in Blog

A Budget is a forward projection of expected profit from your turnover and shows the costs of running the business for a given period. They are shown in terms of profit and loss and do not directly show how much cash you have in the bank.

A cashflow meanwhile shows you when you can expect your income to come in, and when you have to actually pay your bills. The budget will show you for example when you will incur your bills but the cashflow will show when you actually pay for them. You might invoice $xx to your clients during a particular month (which will show on your budget) but only 50% of those clients might actually pay you during that month (this will show on your cashflow). The start of the cashflow will show the opening balance in your bank account/s, and at the end of each month this total will be carried across and updated based on how much income you expect to receive in the hand, and pay out, for each month.