Money · Cash Flow
The 13-Week Cash Flow Forecast, Explained for Small Businesses
Profit tells you whether the business works. Cash tells you whether it survives the quarter. A rolling 13-week forecast is the simplest way to see a shortfall before it arrives.
- (Author)
- Callum Reyes
- (Published)
- (Reading)
- 3 min
- (Section)
- Money
In this guide 4 sections
Plenty of profitable businesses run out of cash. The usual story: a big order is delivered, the invoice goes out on 60-day terms, and in the meantime rent, wages and the supplier all need paying. On paper the month was excellent. In the bank account it was a crisis.
A 13-week cash flow forecast is the standard tool for seeing that gap before it arrives. Thirteen weeks is one quarter: long enough to spot trouble, short enough that the numbers are more than guesses.
What goes into it
The forecast is a grid with one column per week and three groups of rows: cash coming in, cash going out, and the running balance. The key word is cash. You record each item in the week the money is expected to land in or leave the bank account, not the week you send or receive an invoice.
| Row | Examples | Where the dates come from |
|---|---|---|
| Opening balance | Bank balance at the start of the week | Your bank account |
| Cash in | Customer payments, card settlements, loans received | Invoice due dates, adjusted for how late each customer usually pays |
| Cash out | Wages, rent, suppliers, tax, loan repayments, subscriptions | Payroll dates, supplier terms, tax deadlines |
| Closing balance | Opening + in − out | Calculated; becomes next week's opening balance |
Be honest about when customers pay
The most common mistake is assuming customers pay on the due date. Look at the last few months and note how late each major customer really pays, then use that. If a client on 30-day terms reliably pays on day 45, forecast day 45. The forecast is only useful if it is slightly pessimistic.
Don't forget the lumpy payments
Quarterly tax payments, annual insurance renewals and yearly software licences are easy to miss because they are not monthly. Go through last year's bank statements and list every payment that happened only once or twice.
In the US, for example, many owners and companies make estimated tax payments quarterly, and those deadlines belong in the forecast as fixed outflows. The SBA's guide to managing business finances is a useful companion for the wider picture.
Reading the forecast
Look for the lowest closing balance in the next thirteen weeks. That number, and the week it falls in, is the point of the whole exercise. If it dips below the buffer you are comfortable with, you now have weeks rather than days to act: chase a late payer, ask a supplier for longer terms, delay a purchase or arrange a facility with the bank before you need it.
The forecast will be wrong. Its value is in showing you where it was wrong, every week, until it isn't.
Keep it rolling
Every week, replace the forecast for the week just gone with what actually happened, then add a new week at the end so you always see thirteen ahead. Note the biggest differences between forecast and actual. Over a few months you will learn which numbers you consistently get wrong, and the forecast becomes more accurate.
Software subscriptions deserve their own line, because they creep upwards as a team grows; we cover that in our piece on when to move off spreadsheets. And if you sell through marketplaces, remember that payouts arrive on the platform's schedule, minus its fees; see what selling on a marketplace really costs.
