Any company, in its daily activity, has to prepare continuous projections about its future financial future. This is especially important in everything that has to do with their treasury, since companies have to know their financial situation to avoid problems with their liquidity and be able to undertake investments. And, here, the treasury budget is an essential document to achieve this.

What is the treasury budget?

The treasury budget is a financial report that is used to forecast the effective flow of inputs and outputs of a company in a given period, usually in the short term (a month, quarter, semester or year). This report is based on the expected receipts and payments for that period (not to be confused with income and expenses), as well as bank account balances and existing payment commitments.

What is the treasury budget for?

A treasury budget is used to plan and control a company’s cash flows over a given period of time, usually a year. This is essential to achieve correct financial management, as it allows you to forecast cash needs and ensure that the company has sufficient liquidity to meet its financial commitments.

In addition, the treasury budget facilitates the planning of operational and investment activities, and anticipates situations of cash deficit or surplus, allowing preventive or corrective measures to be taken to avoid financial problems.

Finally, this report is also useful when evaluating the impact of different what-if scenarios within the company. For example, if a decrease in sales is anticipated, the treasury budget can show how this would affect cash flows so that measures can be taken to mitigate the negative effects.

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