Thirteen weeks on one page

A monthly cash forecast can show a healthy balance at every month end and still hide the week the business nearly ran out. Payroll, a VAT payment and a quarterly rent can land in the same seven days, and a monthly view smooths the whole thing into a number that looks fine.

The standard answer to this is the thirteen week cash flow. Weekly resolution, one quarter ahead, rebuilt every week. It is old, it is unglamorous, and in a tight period it is the single most useful page in the business.

Why thirteen

Far enough out that you can still do something about what you see. Close enough in that the numbers are mostly known rather than assumed. Beyond a quarter, weekly detail stops being forecasting and starts being decoration.

Build it from known dates first

Most of the outflows are already in the calendar. Payroll dates, PAYE and national insurance due dates, the VAT quarter, corporation tax nine months and a day after year end, loan repayments, insurance renewals, the annual audit fee everyone forgets. Put the fixed and dated items in before you touch the estimates, and half the page fills itself.

• Receipts by customer, based on their actual payment behaviour rather than your terms.
• Payroll and the taxes that follow it, on the dates they clear.
• Anything above a threshold you set, named individually rather than lumped into other.

Use behaviour, not terms

The most common mistake is forecasting receipts on invoice terms. If a customer has paid on day fifty two for the last nine months, forecasting them on thirty days is not optimism, it is an error you have already been shown. Take the average lag per customer from the ledger and use that. The forecast usually gets worse before it gets useful.

Roll it, do not rebuild it

Every Monday, drop the week that has gone, add a week at the far end, and update the actuals. The value comes from doing this repeatedly, because the comparison between what you expected last week and what happened is where the learning is. A thirteen week forecast built once in a crisis is a spreadsheet. Rolled weekly, it becomes the earliest warning system the business has.

The point is not the trough. The point is seeing it six weeks out, while you still have four options rather than one.

One page, three lines of commentary

The output should fit on a single page: the weekly balance, the lowest point, and what is driving it. Add three lines saying which assumption you are least sure about, what you would do if the trough got worse, and by when you would need to decide. A board that has that in front of it can act. A board that gets a forty tab workbook cannot.