Cash Budget Analysis and Financial Planning: Caretech's Report

This report presents a cash budget analysis for Caretech, focusing on the months of October, November, and December. The analysis includes an examination of cash inflows, such as government grants and charitable contributions, as well as cash outflows, including expenses like rent, labor, and loan repayments. The report highlights the importance of effective cash flow management to avoid budget shortfalls and the need for prioritizing capital-intensive projects. Problems in preparing the budget are discussed, such as categorizing expenses and managing cash flow. This report aims to provide insights into Caretech's financial planning and resource management, emphasizing the significance of financial stability and strategic decision-making.

Task 3

Preparing the budget Cash Budget for three months ending
Dec 2018
Octobe
r November December
Opening cash
balance 15000 -11400 7600
Cash inflows
Government grants
and allocations 160000 165000 180000
Charity received
from various
organizations 25000 40000 42000
(a) Total cash
inflows plus
opening cash
balance 200000 193600 229600
Cash outflows
Cash purchase 50000 62000 66000
Payment of credit
purchase 22000 24000
Rent 59400 0 0
Labour 57000 61000 58000
Other Expenses 14000 11000 15000
Bank Loan
repayment 10000 10000 10000

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A budget report is prepared for managing the funds of the organization. A shortfall in the amount
lead to the increase to the financial liability of the business. It can be temporary or persistent which
may be because of poor management of financial resources (Zietlow and et.al, 2018). The budget
shortfalls can be controlled or reduced using following processes.
 Priorities: In Caretech residential care, the capital-intensive projects should be taken out after
conducting proper appraisal techniques and only the most important and profitable one should be
invested in.
 Cash flow management: Effective management of the cash flow will help in ensuring
that expenditure should not exceed over the earnings and can also make use of reporting
software’s that will make analysis easy.

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Problems while preparing budget
 Problems while preparing cash budget are- dividing the expenses into
monthly, quarterly under various categories, managing the cash with
respect to previous month etc. this all steps makes it complicated.