Building a 13-week cashflow forecast: a director’s working tool
Companies usually get into difficulty on a particular Friday, when there is not enough cash in the account to meet the payroll or the VAT bill. The business can be trading perfectly well on paper at the time. Profit is measured over a period, so it can look healthy while the account runs dry in the middle of a month. The single most useful tool for staying on top of the difference is a 13-week rolling cashflow forecast: a simple, week-by-week projection of the money coming in and going out over the next quarter. This piece explains what it is, how to build one, and how to use it to see problems — and opportunities — before they arrive.
Why 13 weeks, and why weekly
Thirteen weeks is one quarter, which is far enough ahead to catch the big commitments — a quarterly VAT payment, a rent day, a large supplier settlement — while your estimates still rest on real, known figures. Weekly granularity matters because cash problems are usually a question of timing inside a month. A company can be comfortably cash-positive across a month and still run dry in week two, because a big payment lands before the money that funds it arrives. Averaged out over the month, that trough disappears from view entirely.
What goes in it: the rows that matter
A forecast is just a grid: thirteen columns, one per week, and a handful of rows. You do not need accounting software to start — a spreadsheet is enough. The rows fall into three blocks.
- Opening cash. The bank balance at the start of the week. Week one is today’s actual balance; every later week carries forward the closing balance from the week before.
- Cash in. Money you expect to actually receive that week: cash landing in the account rather than invoices raised. Time it to when customers really pay, using their normal payment behaviour, not the theoretical due date. Split out anything lumpy or uncertain so you can flex it.
- Cash out. Everything leaving the account: payroll, PAYE and pension, rent, suppliers, loan repayments, VAT and corporation tax, subscriptions, the small recurring costs that add up. Put the fixed, certain commitments in first — those are the ones you cannot miss.
- Closing cash. Opening + cash in − cash out. This becomes next week’s opening balance, and it is the number you watch: the lowest closing balance across the thirteen weeks is your tightest point.
The number to watch: the low point
Read the closing-cash row across all thirteen weeks and find the lowest figure. That trough is what the forecast exists to show you. Where it dips towards zero, or below, you have found a funding gap before it becomes a crisis, with weeks of notice to do something about it. Anything comfortably above zero is headroom. That is the whole value of the exercise: it converts a vague worry into a dated, sized number you can act on. The way a company’s trade shapes where that trough falls is the subject of the cashflow gap, by industry.
Making it rolling: update every week
Build the forecast once, file it, and you have wasted an afternoon. The point is that it rolls: each week you drop the week just gone, add a new week thirteen out, and — crucially — replace your estimates with what actually happened. That last step teaches you fast how accurate your assumptions were, and the forecast gets sharper every week. Ten minutes each Monday keeps it live, which matters, because a fortnight-stale forecast gives false confidence.
What to do when the trough goes red
A forecast is only useful if it drives action. When the low point turns negative, you have levers, roughly in order of preference:
- Pull cash in forward. Invoice sooner, chase overdue receipts, offer a small early-settlement discount, or ask for a deposit on large orders.
- Push non-critical spend back. Defer discretionary purchases past the trough, and agree longer terms with suppliers where you can. Negotiating those terms is covered in negotiating supplier and customer payment terms.
- Talk to HMRC early about a Time to Pay arrangement if a tax bill is the pinch — see funding a VAT or tax bill.
- Bridge a genuine, short, self-liquidating gap with finance sized to the trough rather than rounded up to a convenient figure. A forecast tells you exactly how much you need and for how long, so you are far less likely to over-borrow. Whether a bridge is even the right answer is set out in when not to borrow.
Why lenders like a company that forecasts
A director who can produce a clean 13-week forecast is signalling something a lender values: that they understand their own cash and are asking to borrow a specific amount for a specific, dated reason. It reframes a funding request from “we’re short” to “our week-seven trough is £X because a large receipt lands in week nine”, which is something a lender can actually work with. It also connects to how a lender tests the request in the first place — the logic in how a lender assesses affordability.
The honest summary
A 13-week rolling cashflow forecast is a spreadsheet with thirteen columns and four blocks of rows: opening cash, cash in, cash out, closing cash. Build it from known commitments first, time receipts to when customers really pay, and update it every week with actuals. The lowest closing balance is the number that matters — find it, and you find your funding gaps with weeks of warning. It is the cheapest, most powerful financial tool a director of an incorporated business can keep, and it makes every borrowing decision that follows a better one.