Cash flow forecast: the thirteen weeks that decide whether you survive

A cash flow forecast projects the money actually entering and leaving your bank account over a coming period. It is not a profit forecast and the difference is the whole reason it exists: profit is recorded when a sale is earned, cash arrives when the customer pays, and businesses fail in that gap while looking profitable on paper.

The version that works for small businesses is a rolling thirteen-week forecast — a quarter, updated weekly. Thirteen weeks is long enough to see a problem while there is still time to act on it, and short enough that the numbers are real rather than aspirational.

Building it

1. Start with the actual bank balance today. Not the ledger balance, the bank one.
2. List money in, week by week: invoices due, with the date the customer will realistically pay rather than the due date. If they always pay at forty days, use forty.
3. List money out: payroll and its dates, rent, tax payments, supplier invoices, loan repayments, subscriptions. Tax and payroll are the two that get forgotten and the two you cannot delay.
4. Calculate the closing balance for each week and carry it forward as the opening balance of the next.
5. Mark the lowest point. That number, and the week it falls in, is the output of the whole exercise.
6. Update weekly with what actually happened, and roll the window forward one week.

Forecast when customers will actually pay, not when the invoice is due. This single adjustment is what separates a forecast that works from one that is politely wrong every week. If a customer has paid at forty-five days for two years, they will pay at forty-five days again, and a forecast built on thirty-day terms will show cash you do not have — in the week you were relying on it.

What the forecast tells you

• Whether you can make payroll in eleven weeks. This is the question it exists to answer.
• Whether a large purchase is affordable now or in two months, which is usually a cheaper answer than it feels.
• How much a slow payer is actually costing — visible as the difference between the forecast with and without them paying on time, and addressable through credit control.
• Whether you need finance, and when to ask. Approaching a lender twelve weeks ahead with a forecast is a different conversation from approaching them in the week of the gap.
• The seasonal shape of the business, once you have run it long enough to compare.

Forecast, projection, statement

Three neighbouring documents worth separating. The cash flow forecast is forward-looking, short-horizon and updated constantly. Financial projections are longer-term and usually built for a plan or an investor, covered in financial projections template. The cash flow statement is historical, part of the annual accounts, and explains where cash went last year rather than where it is going — covered in cash flow statement. Only the first will tell you about the week after next.

When it looks bad

The forecast showing a gap is the forecast doing its job, and the actions available are more numerous twelve weeks out than two. Chase receivables specifically rather than generally. Agree longer terms with a supplier before you need them, which is a normal conversation in advance and an awkward one when a payment has already been missed. Delay discretionary spending. Talk to the bank early. And check the assumptions once more — a forecast built on optimistic payment dates produces false alarms, which is its own failure because it teaches you to ignore the next one.

Where to keep it

Ettex Sheets is the natural home: a thirteen-column grid you update weekly, with the arithmetic visible rather than hidden. The actuals come from Ettex Books and the outstanding invoices from Ettex Invoices, and the receivables position behind the money-in column is covered in accounts receivable.

Being clear about limits: there is no bank feed, no automatic import of transactions and no forecast generated from your history. The weekly update is manual, which is a genuine cost — and also the reason the person doing it knows what is coming, which is most of the value.

Where the facility is asset-backed, the forecast is not the only number the lender watches. A borrowing base certificate reports the eligible receivables and stock that support the borrowing, on their schedule rather than yours, and getting it wrong is a covenant issue rather than a cash issue.

The forecast is a working document, not a plan. Where you are raising money or applying for a facility, the reader will also expect the narrative sections a business plan template supplies, and will notice quickly if the story and the numbers describe different companies.

Where the facility is asset-backed, the lender watches a second number on its own schedule. A borrowing base certificate reports the eligible receivables and stock supporting the borrowing, and a covenant compliance certificate confirms the ratios — both are due whether or not the forecast looks healthy.