Quick answer: A 13-week cash forecast starts with reconciled cash and lists actual expected receipts and payments by week. Ending cash in one week becomes opening cash in the next. Refresh it every week, compare forecast with actuals and act before the lowest cash point arrives.
A monthly profit forecast can miss a Friday payroll problem. A rolling 13-week view gives a owner an operational window across roughly one quarter without pretending that every distant amount is certain. BDC recommends the approach as a practical cash-planning tool. The point is to make decisions early, not produce a decorative spreadsheet.
The minimum useful weekly template
| Row | Week 1 | Week 2 | Week 3 |
|---|---|---|---|
| Opening bank cash | 45,000 | 28,000 | 13,000 |
| Confirmed and probable receipts | 35,000 | 42,000 | 70,000 |
| Payroll, suppliers, tax, debt and other payments | (52,000) | (57,000) | (49,000) |
| Projected ending cash | 28,000 | 13,000 | 34,000 |
All figures are illustrative CAD. Week 2 is the pressure point even though Week 3 looks healthy. A lender-approved facility may help bridge a timing gap, but it must be available when needed and repayable from identifiable collections. A forecast should not count unapproved financing as certain cash.
Build the forecast in six steps
- Reconcile opening cash. Use actual bank balances and identify restricted funds, uncleared payments and minimum operating cash.
- Schedule customer receipts by expected collection date. Start with invoice aging and customer confirmations, not sales booked. Separate committed, probable and speculative collections.
- Schedule all payments. Include payroll and benefits, supplier terms, rent, tax remittances, debt principal and interest, capital purchases and owner distributions.
- Calculate each closing balance. Opening cash + collections - payments = ending cash; carry it to next week. Flag any week below your operating floor.
- Model downside and upside. Test what happens if a top customer pays two weeks late or inventory costs arrive early. Do not silently shift dates to make the result look better.
- Roll it every week. Replace the completed week's forecast with actuals, explain the variance, and add a new week at the far end.
Use the lowest week to make a decision
Illustrative service contractor
A $70,000 milestone is expected in Week 3. If payment slips to Week 5, Week 3 ending cash moves from $34,000 to negative $36,000, before any other changes. The owner can verify the invoice and acceptance terms, phase nonessential spending, discuss supplier schedules and assess a suitable financing facility. None of these choices should assume a lender will approve credit instantly.
Discussed early, a temporary shortfall can be a planned decision. Discovered on payroll day, it becomes an emergency. Where a signed contract causes the timing gap, see purchase order and contract finance. For a recurring operating gap, compare a working capital loan and operating line.
Make assumptions traceable
Label receipts by customer, invoice, due date, likely date and confidence. Record who confirmed a date. For costs, reconcile payroll calendars, tax deadlines, supplier statements and loan amortization schedules. Keep a short assumption log so a future reader can distinguish an agreed extension from a hopeful delay. The forecast is useful only if the team can challenge its inputs.
Separate scenarios from the base case. A purchase order that has not yet been awarded belongs in an upside scenario, not confirmed collections. If growth requires buying inputs before payment, pair this forecast with the profit-to-cash bridge and a margin test.
The 20-minute weekly review
Compare last week's expected and actual cash by customer and payment category. Update the next 13 weeks, name the minimum-cash week, and assign actions with dates. In the monthly owner financial review, reconcile this weekly outlook to the balance sheet and income statement. If cash is persistently negative without a realistic repayment event, professional help is more important than making the forecast look optimistic.
How to read a forecast variance
Suppose Week 1 collections were forecast at $35,000 but actual collections were $22,000. Record the $13,000 variance by invoice and ask whether it is a timing slip, a dispute or a permanent shortfall. If a customer pays in Week 2, move the receipt and recalculate every subsequent balance. If the sale will not be collected, do not merely move the number further right each week. Correct the underlying receivable estimate and seek accounting advice on any loss allowance.
Payments can vary too. A supplier invoice may arrive early, payroll may include overtime, or sales-tax remittances may differ from estimates. Keep a simple variance log with cause, owner, corrective action and next review date. Over time, the log improves assumptions and shows whether the same error is recurring.
How to use the forecast in a financing discussion
Show the lowest projected balance, the maximum funding gap, when it occurs, what causes it and which identifiable receipts would reduce it. Include a downside case and the cash floor needed to run operations. If an existing line has availability limits or a borrowing base, reflect actual usable availability rather than the headline limit. Compare total borrowing cost and security requirements with other actions, such as deposits or changed payment terms. Approval and facility timing remain with the lender.
Frequently asked questions
Why 13 weeks rather than 12 months?
The weekly horizon reveals exact near-term payment collisions; an annual monthly model is still valuable for strategy and longer-term capital needs. Use both at their appropriate resolution.
Should I enter invoices at their due dates?
Use realistic expected collection dates informed by actual customer behaviour, and keep the contractual due date visible separately.
Is the forecast the same as a cash-flow statement?
No. The statement reports historical cash movements; the forecast estimates future receipts and payments.
Make your cash gap visible and financeable.
ALOS helps business owners understand their capital needs, organize financial evidence and prepare a clearer financing request for lender review. We help compare possible structures and communicate the story behind the numbers.
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