# How to Compute Budgeted Cash Receipts

The amount of cash receipts in an accounting period is the money a company collects from the sales it makes in current and previous periods. A business typically collects a percentage of its sales in the quarter in which it makes them and collects the remaining portion in the following quarter. Your budgeted cash receipts are the amounts of cash you expect to collect based on the forecasted sales in your sales budget. You can calculate your budgeted cash receipts to help determine how much cash you have to use in your cash budget.

#### 1

Determine based on your business’ accounting records the percentage of sales your company typically collects in the quarter in which it makes the sales. Determine the remaining percentage of sales your company typically collects in the quarter after it makes the sales. For example, assume your company collects cash payment on 60 percent of the sales in the quarter in which it makes the sales. Assume you collect the remaining 40 percent of the sales in the quarter after you make the sales.

#### 2

Determine your business’s sales in the previous quarter. Forecast your sales for the current quarter. In this example, assume last quarter’s sales were $1,000 and the current quarter’s forecasted sales are $1,200.

#### 3

Multiply the percentage of sales you collect in the quarter after you make the sales by last quarter’s sales to determine the amount of those sales you will collect in the current quarter. In this example, multiply 40 percent, or 0.4, by $1,000 to get $400.

#### 4

Multiply the percentage of sales you collect in the quarter in which you make the sales by the forecasted sales for the current quarter to calculate the amount of the current quarter’s sales you will collect in the current quarter. In this example, multiply 60 percent, or 0.6, by $1,200 to get $720.

#### 5

Add the amount of last quarter’s sales you will collect this quarter and the amount of the current quarter’s sales you will collect this quarter to calculate your budgeted cash receipts for the current quarter. In this example, add $400 and $720 to get $1,120 in budgeted cash receipts for the current quarter.

References

Tips

- Forecast sales for future quarters and use the same collection percentages to calculate your budgeted cash receipts for future quarters.