17.4. Cash Variance Analysis
Comparing estimated and actual cash figures allows managers to investigate the reasons for any significant discrepancies and to take any needed corrective action. Variance analysis allows managers to get a better picture of the cash position and provides insight in improving cash estimates in the next budgeting period. It also aids in the periodic revision of projections. This updating typically occurs at the beginning of each budget segment (e.g., the first day of a quarter, assuming a quarterly budgeting period, or the first day of a month, assuming a monthly budgeting period). Budgets should be adjusted immediately for significant changes.
Exhibit 17.4 presents an analysis of cash budget variances.
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