Why every growing business needs a 13-week cash flow forecast

What it is

A 13-week cash flow forecast sets out the cash you expect to receive and pay, week by week, for the next quarter. It starts from today's bank balance and shows the expected balance at the end of each week.

It is rolling: each week, you replace the forecast for the week just gone with actual figures, add a new week at the end, and update anything that has changed.

Why 13 weeks?

Thirteen weeks is long enough to see pinch points coming, such as a VAT quarter, a large supplier payment or a slow-paying customer, and short enough to forecast in detail with reasonable accuracy. It gives you time to act: chase debtors, agree terms with a supplier, delay a purchase or talk to the bank before there is a problem, not after.

What goes into it

• Expected receipts from customers, based on invoices raised and realistic payment patterns
• Payroll, PAYE and pension contributions
• Supplier and subcontractor payments
• VAT, corporation tax and other tax payments
• Rent, loan repayments, leases and other fixed costs
• Planned one-off items such as equipment purchases or dividends

How to make it useful

• Update it every week, at the same time, and compare forecast with actual.
• Be realistic about when customers really pay, not when they should.
• Review it with the leadership team so decisions are made with it in view.
• Use it to test scenarios: a lost customer, a large new contract or a price rise.
• Share it with your bank when you need support. Lenders value a credible forecast.

A cash flow forecast is only as good as the information behind it. If your sales ledger, payment terms or month-end processes are unreliable, fixing those first will make the forecast far more accurate.