Build a Simple 13-Week Cash Flow Forecast

A profitable month can still end with too little cash to pay a bill. A customer may accept your work today but pay in four weeks, while payroll, stock and rent need payment sooner. A 13-week cash flow forecast makes that timing visible. It is a working estimate of money entering and leaving your bank account each week, not a prediction of sales or an income statement. You can make one with a sheet of paper or a simple spreadsheet. The value comes from reviewing it, not from making the first version perfect.

Start with the bank balance you can actually use

Choose a consistent day each week, such as Monday morning. Enter the available business bank balance as the opening cash for week one. Exclude an overdraft limit that has not been drawn, and identify money already reserved for an obligation rather than treating it as freely spendable. If you have several business accounts, decide which balances are included and use the same approach each week. Reconcile obvious pending card settlements and bank transactions before you start. The opening balance for week two is the closing balance calculated for week one.

Create 13 columns, one for each week, and four groups of rows: opening cash; expected cash receipts; expected cash payments; and closing cash. The basic calculation is opening cash plus receipts minus payments equals closing cash. Separate regular receipts from named customer invoices and separate predictable payments from one-off commitments. A single total hides the payment that causes a shortage. Use actual due dates and the date money is likely to clear, rather than the date a sale was agreed. The Australian Government's cash flow statement guidance explains that a forecast can be built by entering estimated future figures in a cash flow template.

Record receipts at realistic dates

List existing unpaid invoices separately when an individual payment matters. For each, note customer, amount, due date, expected receipt week and confidence: confirmed, likely or uncertain. A due date is not proof of arrival. If a customer normally pays late, place the amount in a later week or make a second scenario. Do not quietly count the same invoice in both confirmed receipts and expected sales. For retail takings, use recent comparable weeks as a starting estimate and record card settlement delays. For a service business, distinguish booked work from a proposal that has not been accepted. Put speculative work in a separate scenario until it becomes a real commitment.

Then add payments: wages, rent, suppliers, financing, insurance, owner withdrawals where applicable, scheduled tax amounts and known equipment purchases. Confirm amounts and dates against invoices, contracts and payment schedules. Some taxes, employment payments and creditor priorities depend on jurisdiction; check local requirements rather than moving them casually in a forecast. If a payment is uncertain, record a range or an explanatory note. The point is to make assumptions visible to the person deciding what to do.

A compact example

Assume a small repair shop starts week one with 8,000 units of its own currency. It expects 4,000 in confirmed customer receipts and 2,000 from an invoice that may arrive late. Payments of 9,000 are already scheduled. With both receipts, closing cash is 8,000 + 6,000 − 9,000 = 5,000. Without the uncertain invoice, closing cash is 3,000. In week two the shop expects 3,000 in receipts and 7,000 in payments. Its closing balance would then be 1,000 in the first scenario, but minus 1,000 in the delayed-payment scenario. The business needs a response before week two, even if the underlying jobs earn a profit. These are illustrative figures, not a benchmark or recommendation for a safe cash balance.

Extend the same rows through week 13. A blank week should mean that you looked and expect no transaction, not that you forgot to enter one. Include a small note beside an unusual figure so you remember why it was entered. If you have enough detail to know a payment falls on a Tuesday before a Friday receipt, a weekly closing balance might hide a shortfall during that week. Inspect the dates within any week that looks tight. For a very small operation, a more detailed daily view of the next two weeks may complement the 13-week overview.

Review the forecast, then roll it forward

At the end of each week, compare forecast closing cash with the actual reconciled bank balance. Record the difference and its cause: customer paid late, sales were lower, a supplier bill was missing or the bank settled a card transaction later. Do not simply replace the old prediction and lose the evidence. Carry the actual closing balance into the new first week, remove the elapsed week and add a new week 13. Update receipt dates and payment amounts using what you learned. After several reviews you may discover that one category is consistently optimistic. Adjust its assumptions explicitly.

Use a simple decision rule: if any forecast week ends below the amount needed for commitments, investigate that week immediately. Confirm whether invoices are correct and due, contact customers about outstanding balances, negotiate with suppliers before a due date where appropriate, or change the timing of optional spending. Check the financial effect and contractual consequences of each action. A loan or a delayed bill changes timing and may add costs; neither repairs work that loses money on every sale. Keep a note of decisions and the week in which you expect their effects.

Keep profit, cash and uncertainty separate

Profit recognises revenue and expenses under your accounting basis; cash records when money moves. A financed purchase, repayment or owner withdrawal can change cash without appearing as a matching operating expense that week. Likewise an unpaid invoice may appear in sales while leaving the bank balance untouched. Business.gov.au distinguishes cash flow from other financial measures and recommends comparing incoming and outgoing money over time. Ask your accountant to reconcile the forecast with accounting reports if the numbers appear inconsistent.

Avoid false precision. A large forecast receipt based only on hope can make a dangerous week appear safe. Label uncertain amounts, make a delayed-payment scenario, and avoid using an expected tax refund or proposed financing as available cash before it is dependable. If several weeks are negative, you cannot meet payroll or statutory obligations, or the business is repeatedly unable to cover ordinary expenses, seek qualified accounting, restructuring or legal advice promptly. The rules and remedies vary by location.

Next step: list your opening bank balance, committed payments and expected receipts for the next two weeks today. Calculate both closing balances, then add the remaining eleven weeks. Next Monday, compare week one's predicted closing cash with the actual balance and note the largest difference.

Sources

• business.gov.au: Set up a cash flow statement. Guidance on recording money in and out and using estimates for a forecast.
• business.gov.au: Guide to managing cash flow. Guidance on forecasting, payment timing and managing cash.