A profitable business can still run out of cash. Profit includes sales that may not yet be collected and expenses that may not be paid immediately. Cash-flow management focuses on when money actually enters and leaves the bank or cash box.
Why use a 13-week forecast?
Thirteen weeks is long enough to see payroll, rent, taxes, major supplier payments and customer collections, but short enough for estimates to remain practical. Update the forecast every week.
List realistic inflows
Do not simply copy sales invoices into the forecast. Estimate when customers are actually expected to pay. Separate confirmed collections from optimistic possibilities.
List unavoidable outflows
- Payroll and employee obligations
- Rent and utilities
- Supplier payments
- Loan instalments
- Tax and statutory payments
- Essential operating costs
Identify the lowest cash point
The purpose of the forecast is to see the shortage before it happens. If week nine shows a large deficit, management has time to collect receivables faster, renegotiate supplier timing, reduce discretionary spending or arrange financing.
Connect the forecast to bookkeeping
A cash-flow forecast becomes much more reliable when receivables, payables and bank balances are up to date. Poor bookkeeping produces poor forecasts.
Frequently asked questions
Is cash flow the same as profit?
No. Profit measures accounting performance; cash flow focuses on actual money movement and timing.
How often should I update the forecast?
Weekly is practical for a 13-week rolling forecast.
Need help applying this to your business?
General guidance is useful for understanding the issue. Your actual records, registrations and circumstances may require a different treatment.