How to Build a 13-Week Cash Flow Forecast: Method and Worked Example

Step 1: Opening Balance and Layout

Start with the cash in the bank today. Make a table with weeks across the top (week 1 to week 13) and rows for receipts, payments, net cash flow, and ending cash. Receipts include collections from customers, loan proceeds, owner deposits, and other income. Payments include payroll, rent, supplier bills, taxes, loan payments, insurance, subscriptions, and owner draws. Use a spreadsheet and update it every week, rolling forward so you always see the next 13 weeks.

Step 2: Forecast Receipts From the Invoices You Have

Do not simply forecast sales; forecast collections. List outstanding invoices with their due dates and the likely payment date based on how each customer actually pays: if a customer on 30-day terms usually pays in 45 days, plan for 45. For future sales, apply your average collection lag. Cash sales go in the week of sale. Include seasonality and known events, and be conservative: a 10% haircut on uncertain receipts is a common practice.

Then forecast payments by due date: payroll on the paydays, rent on the first, taxes on their deadlines, and supplier bills according to terms you plan to follow.

Step 3: Find the Low Point and Plan

In the example, cash falls to $19,000 in week 2 after a heavy payment week, then recovers. If the low point were below zero or below a minimum buffer (say, two weeks of payroll), you would act: chase overdue invoices, negotiate longer supplier terms, delay discretionary purchases, arrange a line of credit in advance, or schedule payments to align with receipts. Mark a minimum cash threshold on the forecast and flag any week below it. The earlier you see a gap, the cheaper it is to fix.

Step 4: Compare Actuals and Improve

Each week, record the actual receipts and payments and compare them with the forecast. Note the variances and their causes: a customer paid late, a bill was higher. Adjust assumptions for future weeks. Over a few cycles, your forecasts become more accurate. Keep scenarios: base case, downside (receipts 15% lower or 2 weeks later), and upside. Sharing the forecast with your bank and key suppliers builds trust.

Common Mistakes

Confusing profit with cash; ignoring the timing of tax and annual payments; forgetting loan repayments and owner draws; being too optimistic about collections; and not updating the forecast regularly. Include capital expenditures and one-time costs when known. A simple spreadsheet used consistently is better than a complex model used rarely.