How does a thirteen-week cash flow forecast work?

Definition

A thirteen-week cash flow forecast is a rolling grid that projects cash week by week for the next quarter. On the books, this is a cash calendar built from expected receipts and payments, not the historical Statement of Cash Flows and not a monthly budget copied into thirteen columns.

A shop with a Friday payroll and midweek vendor bills reads it to see which weeks will be tight. The question is the week-by-week walk for the next thirteen weeks, not a single monthly total.

It is a rolling view, not a snapshot of cash today. The Balance Sheet is week 0; each following column is a week that has not happened yet.

Stay with the thirteen-week grid when you read it. A looser projection of receipts and payments can live in other shapes; this page is the quarter built in weeks.

Where it shows up

Cash flow: Related to a week-by-week view of the next quarter.

Balance sheet: Related to today's cash, week 0.

P&L: Related to the invoices and bills that will hit those weeks.

See also: Cash Flow Forecast · Cash Position · Rolling Forecast

When you look at your Statement of Cash Flows, you are looking backward. This grid looks forward from today's cash, one week at a time, for thirteen weeks.

When a week in the grid is tight, payroll and vendor bills may not both fit. When the later weeks recover, the shop can see that the pinch is a calendar problem, not a permanent hole.

The Income Statement does not print this grid. Revenue invoiced this week can still sit in accounts receivable until the customer pays.

Accounts payable on the Balance Sheet is a hint about which weeks will see vendor bills leave. Payroll expense usually lands on the same weekday every cycle.

How it works

Put today's cash in week 0. For each of the next thirteen weeks, list receipts you expect to clear and payments you expect to leave.

How a thirteen-week cash flow forecast usually works:

• Put today's cash in week 0
• For each of the next thirteen weeks, list expected receipts and payments
• Add receipts and subtract payments to get ending cash
• Carry that ending cash into the next week's beginning cash
• When a week finishes, drop it and add a new week at the end

Add receipts and subtract payments to get that week's ending cash. That ending cash is the next week's beginning cash.

Stay with bank dates. An invoice is a receipt in the week the check or ACH actually lands, not the week you delivered the work.

Payroll is a payment every week it runs. Vendor bills are payments in the weeks those vendors actually get paid.

When a week finishes, drop it and add a new week at the end. The grid always covers thirteen weeks ahead, which is why it is called rolling.

Do not freeze the grid at the start of the quarter and never touch it. Actual deposits and actual bills replace the guesses as they happen, and the new thirteenth week is added as time passes.

The starting cash comes from cash and cash equivalents. Everything after week 0 is a projection you keep honest by updating.

This page stays on the thirteen-week grid. A broader look at receipts and payments, without the rolling quarter discipline, belongs on another page.

Example

Mill Loaf Bakery starts the grid with $40,000 in the operating bank account. In week one, receipts are $12,000 and payments are $18,000, so ending cash is $34,000.

That $34,000 is week two's beginning cash. Friday payroll and a Tuesday flour bill both sit inside the $18,000 of payments.

You repeat the same three lines—beginning cash, receipts, payments—for thirteen weeks. Each week's ending cash feeds the next column.

If week one receipts had been $18,000 instead of $12,000, ending cash would have been $40,000. The rest of the quarter would have started from a sturdier number.

The bakery does not post this grid to the books. It is a worksheet that starts from today's cash and is rebuilt as weeks pass.

When week one closes at an actual $33,000 because a cafe paid late, week two begins at $33,000 and a new week thirteen is added at the far end. The grid stays thirteen weeks long.

Common mix-ups

This grid is not the same as a generic look at future receipts and payments. That broader projection can be monthly or mixed; this page is thirteen weeks, rebuilt as time passes.

This grid is not the same as the Statement of Cash Flows. That statement is history; this page is the next quarter in weekly columns.

This grid is not the same as the month's leftover. A profitable month can still hide a Friday that cannot cover payroll and vendor bills in the same week.

Related terms

• Cash Flow Forecast: A forward projection of cash receipts and payments.
• Cash Position: The amount of cash on hand at a given moment across all accounts.
• Accounts Receivable Aging: A report bucketing open invoices by how long they have been outstanding.
• Accounts Payable Aging: A report bucketing unpaid vendor bills by how long they have been outstanding.
• Check Run: The scheduled batch in which approved vendor bills are paid.
• Collections: The process of following up on unpaid customer invoices.
• Rolling Forecast: A forecast that always extends the same number of periods ahead as time passes.
• Cash Runway: How many months current cash will last at the present burn rate.