When cash gets tight, the financial statements are not enough. They describe the past and arrive months after the year end. To decide what to pay, what to renegotiate and how much time is left, you need a different tool: the 13-week cash flow forecast.
What a 13-week cash flow forecast is
It is a forecast of actual receipts and payments, week by week, for the following three months. It does not work on revenue and costs but on cash movements: when the customer actually pays, when the payment to the supplier actually leaves the account.
It is a living tool. Every week the forecast is compared with the actual figures, the assumptions are corrected and a new week is added at the end, so the horizon always stays at thirteen weeks.
Why thirteen weeks
A quarter is long enough to bring out the deadlines that strain cash: taxes and social security contributions, loan and lease instalments, salaries and additional monthly payments. And it is short enough to allow reliable weekly forecasts. Beyond the quarter, a monthly forecast is more appropriate.
How it is built
The structure always follows the same order:
- Opening cash: current account balances and credit lines still available.
- Receipts: from the customer ledger, adjusted for each customer’s actual payment delays, plus the receipts expected from new invoicing.
- Payments: suppliers, salaries and contributions, taxes, loan and lease instalments, rent and utilities.
- Net movement for the week and closing cash, compared with the available credit facilities.
What it reveals
The first result is the date: the week in which cash is no longer enough. The second is the size of the problem: how much is missing and for how long. From there, priorities can be set, separating the payments essential to continuity, such as employees and key suppliers, from those that can be renegotiated.
A well-built 13-week cash flow forecast is also a credibility tool. With banks and creditors, showing verifiable weekly figures changes the tone of the conversation.
The most common mistakes
- Using revenue instead of receipts.
- Assuming customers pay on the due date.
- Forgetting non-recurring payments: taxes, additional monthly salaries, annual instalments.
- Building it once and never updating it.
When you need it
You need it when liquidity is under strain, before renegotiating with the banks and before any crisis management tool. The six-month financial plan required to access the negotiated crisis settlement is also built using the same logic.
Further reading
Can I help you with this?
If cash is under strain, the first step is to understand how much time you have and what to pay first.
