How to Build a 13-Week Cash Flow Forecast (With Example)

What a 13-week forecast is, and why 13 weeks

A 13-week forecast is a table with weeks across the top and cash movements down the side. Thirteen weeks, roughly one quarter, is long enough to see a problem coming and short enough to forecast with reasonable accuracy, because many of the figures are already known: invoices you have sent, bills you have received, payroll, rent, loan repayments and scheduled tax payments.

Unlike a profit and loss statement, it deals only in cash, and only in the week the money actually moves. A business can be profitable on paper and still run short of cash in a particular week, for example when a large bill falls due before a large customer payment arrives. The forecast is designed to show exactly that, early enough for you to do something about it.

Set up the sheet

Use a spreadsheet with 13 week columns, each labelled with the date the week starts. Down the side, create four blocks: opening cash, cash in, cash out and closing cash. Closing cash for each week becomes the next week’s opening cash, so link the cells rather than typing the figures. Add one more row for your minimum cash buffer, such as two weeks of fixed costs, so that any week below it stands out immediately.

Keep the layout simple enough to update in about fifteen minutes. One row per significant customer or supplier is useful, but group small, regular items such as subscriptions into a single line. If the business has more than one bank account, include them all, and leave out personal accounts, even if you sometimes move money between them.

Step 1: opening cash and expected receipts

Start with today’s combined balance across all business bank accounts. Then place every open invoice in the week you realistically expect to be paid, based on how each customer actually pays rather than on your stated terms. If your invoices say 30 days but a customer usually pays in about 45, an invoice sent at the start of this week belongs in week seven, not week five. An aged receivables report from your bookkeeping software makes this quicker.

For sales you have not yet invoiced, use a cautious estimate, such as your lowest weekly figure from the last quarter, rather than a target. Include card and marketplace payouts net of fees, in the week they reach your bank, and any deposits or stage payments that customers have already agreed to. If you sell through several channels, give each one its own line.

Step 2: payments going out

List every payment you know about and put it in its exact week: payroll, contractor invoices, supplier bills, rent, insurance, software, loan repayments and owner drawings. Large irregular items, such as quarterly sales tax, annual insurance or an equipment purchase, matter most, because they are the ones that usually create a gap. Check your tax deadlines with your accountant or tax authority, because the timing varies by country and business type.

When you are unsure, forecast receipts later and payments earlier. An over-cautious forecast costs you a little optimism; an optimistic one can leave you unable to pay staff or suppliers on time. If a figure is a genuine guess, note the assumption in a comment beside it, so you can check it when the actual number arrives.

Step 3: closing cash and the buffer

Calculate net cash flow and closing cash for each week, then compare every closing balance with your buffer. The worked example below shows the first six weeks of a forecast for Fernhill Print, a fictional print studio with weekly fixed costs of about 5,000 and a buffer of two weeks, or 10,000. Amounts are in the studio’s local currency.

Spotting the week-4 dip three weeks ahead gives the owner options. With the supplier’s agreement, moving the 1,800 paper order to week 6 lifts week 4 to 10,200 and week 5 to 12,300, and week 6 still closes at 11,000. Nothing has been cut; the forecast simply showed when the money would be needed.

Act on gaps while they are still weeks away

The value of the forecast is warning time. When a week falls below your buffer several weeks out, you can usually choose calm options rather than emergency ones. Start with the actions that cost nothing and work down the list, recording each decision in the forecast so that its effect on every later week is visible. If none of these closes the gap, talk to your accountant or bank early; a business that asks for help before a shortfall usually has more options than one that asks afterwards.

• Chase specific overdue or soon-due invoices, starting with the largest
• Ask for a deposit or stage payment on new or ongoing work
• Move or split a purchase that is not yet urgent
• Agree a payment plan with a supplier before the bill is overdue
• Arrange an overdraft or other finance before you urgently need it
• Reduce or pause owner drawings for a few weeks

Roll it forward every week

A forecast that is not updated quickly turns into fiction. Once a week, at the same time, replace the week just ended with actual figures, add a new week at the end so you always see 13 weeks ahead, and update the remaining weeks for anything new. Note the biggest difference between forecast and actual and why it happened; after a few months you will know where your estimates are habitually wrong.

This guide is general information, not tax or financial advice, and tax payment dates and amounts depend on where and how your business is set up. The Bookkeeping & Cash Flow for Small Businesses course covers the bookkeeping that makes forecasting reliable, including bank reconciliation, payment terms, chasing late invoices and setting money aside for tax.