A cash budget is very important, especially for smaller companies. It allows a company to establish the amount of credit that it can extend to customers without having problems with liquidity. A cash budget helps avoid a shortage of cash during periods in which a company encounters a high number of expenses.
Companies rely on a cash budget to plan and control . Cash budgeting is vital to an organization because it allows them to ensure the company's products and opportunities for company expansion, which Expenses can rise too quickly or the company can take on too much debt .