Why 13 weeks, and why weekly
Thirteen weeks is a quarter. That is long enough to see a squeeze coming and act on it: chase a debtor, move a purchase, talk to the bank before you need to. It is also short enough that most of the numbers are already known, because they sit in your open invoices, your unpaid bills and your payroll.
Weekly, because cash problems happen in weeks, not months. A monthly forecast nets the payroll at the end of the month against receipts that arrive in the middle and shows a comfortable month. The weekly view shows the Friday you can't cover.
This is a direct forecast: actual money in and money out, week by week. It doesn't start from profit, and it ignores depreciation, accruals and anything else that isn't cash.
Start from today's cash
Opening cash is what is in every bank account today, after reconciling. Keep three things separate:
- Undrawn overdraft or credit line. Headroom, not cash. Show it as its own line so you can see how much of it you'd use.
- Restricted cash. Fixed deposits under lien, margin money, escrow. You can't pay salaries with it.
- Cash in transit. Cheques deposited but not cleared; card settlements on the way. Put them in week 1 receipts, not opening cash.
Receipts: due dates, then how customers really pay
Start with your open invoices. Each one goes into the week it falls due. Then adjust for behaviour, because due dates are what customers agreed to, not what they do:
- Habitually late payers. If a customer pays 14 days after the due date on average, an invoice due on the 10th belongs in the week of the 24th.
- Overdue invoices. The older they are, the less likely they are to come in. Apply a collection percentage by age, and spread what you expect over the coming weeks.
- Disputed invoices. Leave them out until the dispute is settled.
- Sales not yet invoiced. From around week 5, receipts depend on sales you haven't made yet. Estimate them from recent monthly invoicing and your usual payment terms, and be conservative.
| Bucket | Open | Expect | Receipts | When |
|---|---|---|---|---|
| Not yet due | 180 | 100% | 180 | Due date plus usual delay |
| 1–30 days overdue | 60 | 90% | 54 | Weeks 1–4 |
| 31–60 days | 24 | 75% | 18 | Weeks 2–6 |
| 61–90 days | 12 | 50% | 6 | Weeks 4–8 |
| Over 90 days | 20 | 20% | 4 | Not before week 6 |
| Total | 296 | 262 |
Other receipts, such as tax refunds, asset sales, loan drawdowns or new capital, go in only when the amount and the date are certain.
Payments
- Supplier bills by due date, or by your payment run. If you pay suppliers every Friday, put each bill on the Friday of the week it falls due.
- Bills you know are coming but haven't received: utilities, software, regular suppliers. Use the last few months as a guide.
- Payroll and payroll taxes on their actual dates.
- Statutory payments. In India, for example: TDS deposited by the 7th of the following month (30 April for March), GSTR-3B tax by the 20th for monthly filers, and advance tax instalments on 15 June, 15 September, 15 December and 15 March.
Planned items
Some cash doesn't come from an invoice or a bill: rent, loan repayments, interest, insurance premiums, equipment purchases, dividends. List each with its amount and how often it repeats: once, weekly, fortnightly or monthly.
| Item | Amount | Repeats | Weeks |
|---|---|---|---|
| Payroll | 96 | Monthly | 4, 8, 13 |
| Rent | 18 | Monthly | 1, 5, 9 |
| GST and TDS | 22 | Monthly | 3, 7, 11 |
| Loan repayment | 35 | Once | 6 |
| New equipment | 40 | Once | 7 |
A worked forecast
Put it together. Opening cash is 412. Receipts come from the aging and expected new sales; payments are supplier bills plus the planned items above.
| Week | Opening | Receipts | Payments | Closing |
|---|---|---|---|---|
| 1 | 412 | 58 | (71) | 399 |
| 2 | 399 | 64 | (40) | 423 |
| 3 | 423 | 45 | (62) | 406 |
| 4 | 406 | 52 | (128) | 330 |
| 5 | 330 | 49 | (55) | 324 |
| 6 | 324 | 41 | (74) | 291 |
| 7 | 291 | 38 | (96) | 233 |
| 8 · lowest | 233 | 47 | (130) | 150 |
| 9 | 150 | 66 | (52) | 164 |
| 10 | 164 | 72 | (41) | 195 |
| 11 | 195 | 70 | (60) | 205 |
| 12 | 205 | 68 | (38) | 235 |
| 13 | 235 | 64 | (131) | 168 |
| 13 weeks | 412 | 734 | (978) | 168 |
Three things to read off it: the lowest point (150, week 8), the first week below the minimum (week 8), and the trend (cash falls by 244 over the quarter, because payments run ahead of receipts).
The minimum cash line
Pick the lowest balance you are willing to run at: for example, one payroll plus a month of fixed costs, or the minimum balance in a loan covenant. Here it is 200. The forecast now answers the real question: not "how much cash will we have?" but "when do we first drop below the line, and by how much?"
Week 8 gives seven weeks' notice. The levers, roughly in order of how easy they are:
- Chase the overdue invoices, starting with the largest in the 31–90 day buckets.
- Move discretionary spending. Shifting the equipment purchase from week 7 to week 11 lifts week 8 from 150 to 190.
- Ask key suppliers for longer terms, or agree a payment plan for a large bill.
- Arrange or extend a credit line now, while the numbers still look fine.
Review it every week
A forecast built once and left alone is wrong by week 3. Give it 30 minutes on the same day every week:
- Compare last week with what happened. Receipts and payments, forecast against actual. Note anything more than about 10% out.
- Roll forward. Drop the finished week, add a new week 13, and start from today's actual bank balance.
- Refresh from the ledger. New invoices and bills, and anything paid since last week.
- Fix assumptions, not just amounts. If customers paid later than you assumed, change the delay or the collection percentage, so next week's forecast is better too.
- Check the minimum line and agree who does what about any week below it.
Common mistakes
- Forecasting from the P&L. Revenue isn't receipts and expenses aren't payments. A sale booked this week may be cash in six weeks.
- Forgetting the tax inside receipts. Customers pay invoice totals including GST or VAT, and that tax goes back out on the return date. Forecast both.
- Missing the lumpy items. Annual insurance, quarterly advance tax, bonuses and yearly software renewals don't show up in last month's spend.
- Counting the overdraft as cash. Keep headroom on its own line.
- Building it once. The value is in the weekly roll-forward and in learning how your customers actually pay.
Forecasting for a group
For a group, add up each company's forecast, but leave out intercompany receipts and payments. When a subsidiary pays the parent a management fee, the group's cash hasn't changed. Including both sides should cancel out, but the two companies rarely record them in the same week, which creates swings that aren't real. Leaving both out is simpler and right.
Two more cautions. Cash in one company isn't always available to another: exchange controls, local minimum balances and loan covenants can trap it. So keep a forecast and a minimum line per company as well. And if the companies use different currencies, translate the whole forecast at one rate and say which.
Want to try the method first? Our free 13-week cash flow forecast tool lays out the same weeks in your browser. For groups, the intercompany eliminations guide explains which items cancel out.