The 13-Week Cash Flow – Probably the Most Useful Spreadsheet in a Crisis

A Fraction of the Time, All of the Experience

50Blogs from an Experienced Fractional FD

If cash is tight, one of the first things I want is a 13-week cash flow. There is a reason I like 13 weeks.

It is long enough to see most immediate problems coming, but short enough to build using information you can actually understand. A full-year cash flow has its place.

In a crisis, I want to know what happens next Friday.

Start With the Bank

I usually keep the categories broad enough that management can follow them. A cash flow with 150 lines may be technically detailed but impossible to manage in a meeting. The model needs enough detail to drive decisions, not enough detail to recreate the nominal ledger.

Begin with opening cash. Then build the next 13 weeks by major categories.

Customer receipts.

Payroll.

VAT, PAYE and corporation tax. Rent and other fixed costs.

Supplier payments.

Finance payments.

Any one-off items.

Finish each week with closing cash and available headroom.

Keep it understandable.

Use Three Layers of Information

Existing debtors and creditors matter because the next few weeks are usually driven more by what has already happened than by next month’s sales forecast. I want expected receipt dates for material customers, not simply standard payment terms, and I want realistic supplier-payment assumptions rather than every invoice magically being paid on its due date.

I normally build it in three stages.

First, known payments and receipts.

Payroll dates, tax, rent, loan payments, large customer receipts and anything already committed.

Second, unwind the ledgers.

When are existing debtors actually expected to pay? When do existing creditors need paying?

Third, add forecast trading.

Future sales, purchases and other activity not yet on the ledgers. The closer the week, the more it should be based on known information rather than assumptions.

Use the Cashbook

One of the easiest ways to find recurring items is to look at the previous 13 weeks of bank transactions.

What leaves the account every month?

Insurance.

Software.

Leases.

Loan repayments.

Direct debits.

Small recurring items add up. The cashbook is often a better starting checklist than memory.

Build the Unmanaged View First

This matters.

I want to see what happens if the business simply carries on as planned. Do not hide the problem immediately by delaying every supplier payment or assuming an emergency loan arrives.

Show the unmanaged cash position first. Then show management actions separately.

That lets everybody see both the underlying problem and what is being done about it.

Challenge the Receipts

The same challenge applies to payments. What absolutely has to be paid? What is contractual? What is critical to production? What can be negotiated? In a healthy business this is normal cash management. In a crisis it becomes the basis of the weekly payment plan.

Cash-flow forecasts are naturally optimistic.

“That customer should pay next week.”

Should is not a date.

For material receipts I want to know:

Who is paying?

How much?

When?

Why do we believe that date?

If a receipt matters to survival, somebody should own it.

Show Headroom, Not Just Cash

A bank balance of £100,000 sounds comfortable until you discover payroll is £180,000 three days later. Show overdrafts and other immediately available facilities.

Then show the lowest expected headroom.

That is often the number management really needs to understand.

Roll It Every Week

The variance between forecast and actual is useful information. If customers consistently pay a week later than management expects, change the assumption. If payroll or supplier payments are regularly understated, fix the model. A good 13-week cash flow should become more accurate as the business learns from it.

The model only stays useful if it moves. At the end of each week, replace forecast with actual, investigate the differences and add another week at the end.

Keep 13 weeks visible. Over time you also learn whether management is consistently optimistic about customer receipts or understated on payments.

That improves the forecast.

Stress It

Finally, ask what happens if the big receipt is a week late. Or sales are lower.

Or a tax payment is larger. You do not need dozens of scenarios.

You do need to understand how much room for error exists.

The Point

A 13-week cash flow is not clever.

That is part of its strength.

It tells you where cash gets tight, how much time you have and which actions matter most. In a crisis, visibility buys time.

And time gives you a chance to fix the problem.

If you would like to find out more, please contact me, Jason Soars, Fractional FD, [email protected], 07894641231, www.linkedin.com/in/jasonsoars/