Key takeaways
- Forecast cash weekly for thirteen weeks; a monthly profit forecast cannot show a timing gap.
- Build receipts from invoice due dates and customer behaviour, not from an average collection period.
- Include payments that never appear in profit, such as loan principal, tax, and asset purchases.
- Compare actual cash with the forecast every week and roll the horizon forward.
On this page
What the forecast is for
A 13-week cash flow forecast projects cash in and out for one quarter, week by week. It is a direct forecast: every receipt and payment is listed by expected date, not derived from profit.
It answers three questions: will cash stay above the minimum, which week is tightest, and what action would change it. It is a liquidity tool, not a profit forecast.
Thirteen weeks is a convention, not a rule. It covers a quarter and keeps assumptions testable. Longer delivery cycles may need a longer view, but the weekly discipline should stay.
Set the layout and opening balance
Use one column per week and a fixed row structure. The layout below is enough to run and review the forecast. The opening balance must agree to the bank: include issued but uncleared payments and exclude unavailable deposits.
| Row | What it contains | Source |
|---|---|---|
| Opening cash | Cleared bank balance less unpresented payments | Bank reconciliation |
| Receipts: committed | Invoices with a confirmed payment date | Sales ledger and customer confirmation |
| Receipts: expected | Due invoices adjusted for observed delay | Aged debtors |
| Payments: committed | Payroll, rent, tax, loans, approved suppliers | Payroll, contracts, ledgers |
| Payments: discretionary | Spend that can move | Budget holders |
| Closing cash | Opening plus receipts less payments | Calculated |
| Headroom | Closing cash plus undrawn facility less minimum balance | Calculated |
Build receipts from the ledger
Start with aged debtors, not a sales forecast. Each open invoice needs a customer, amount, due date, and expected receipt date. Group customers by behaviour: on time, predictably late, late after chasing, or disputed.
- Use the due date plus the observed delay for that customer or segment.
- Hold disputed invoices outside the base until the dispute is resolved.
- Model deposits and staged payments from the contract, not the invoice date.
- Show a large customer separately; an average hides concentration risk.
- Exclude new sales until there is an invoice or a signed order with a payment date.
Build payments from commitments
List every payment by its bank date. Payroll is usually the largest fixed item; include employer taxes, pension, and commission. Rent, insurance, subscriptions, and loan instalments follow their contracts.
Separate committed from discretionary payments. A discretionary delay has a consequence, such as a supplier hold or delayed project, and the forecast should show it.
Do not omit payments outside profit. Loan principal reduces cash without reducing profit, and asset purchases are capitalised rather than expensed.
- Suppliers: approved invoices on the agreed payment run, not the invoice date.
- Tax: VAT, payroll taxes, and corporate tax on their statutory dates.
- Financing: loan principal, interest, leases, and facility fees.
- Capital spend: deposits and staged payments for equipment or development.
- One-offs: legal, restructuring, or settlement costs with a date and an owner.
Review weekly and roll forward
Fix the review on the same day each week. Compare the previous forecast with actual bank movements line by line, and investigate differences above a set threshold, such as £5,000 or 5% of the week's payments.
End with decisions. If a customer has slipped, name who will call and when. If a payment can move, state the cost of moving it. Record an owner and a date.
Rolling forward is mechanical: drop the past week, add a new week, and reset the opening balance from the bank. Keep the prior version so accuracy can be measured.
Set triggers and scenarios
Agree a minimum cash balance in advance. It should cover the next payroll and committed payments that cannot move, plus a director-approved buffer.
Run a downside scenario, such as the largest customer paying four weeks late. Keep it separate from the base so the reader sees the trigger point.
Review with the person who authorises payments and the person who chases receipts. A forecast reviewed only by finance describes the problem without changing it.
- Amber: closing cash within 10% of the minimum in any of the next four weeks.
- Red: cash below the minimum, or facility headroom below the next loan payment.
- Action: delay discretionary spend, accelerate collections, draw the facility, or raise funding.
Frequently asked questions
How is a 13-week forecast different from an annual cash flow?+
The annual view supports planning and funding. The weekly view exposes the exact weeks where commitments exceed receipts.
Should VAT and loan repayments be included?+
Yes. They are cash movements even when they are not expenses. Use the statutory payment dates and the loan schedule.
What if the payment date is unknown?+
Use the customer's observed payment delay, label it as an assumption, and update it when cash arrives. Do not count a disputed invoice.
How often should the forecast be updated?+
Weekly. Update the actual cash, explain the variance, and add a new week at the end so the horizon stays at thirteen weeks.
Need help applying this?
Get help with Financial Reporting & Analysis.
Review the service scope or tell us what you are trying to improve. We will reply with a clear next step.
Free KPI definition templateRelated reading
Management accounts vs statutory accounts
Management accounts guide decisions during the year; statutory accounts report the year that has ended. Here is how they differ and when each matters.
Gross margin analysis by product
A practical product margin report: what belongs in cost of goods sold, how to handle landed cost, and how to read price, volume, and mix effects.