What are your business’ cash needs for the upcoming quarter? The 13-week cash flow forecast is an important tool for any business owner to have to manage one’s business. If you are not currently relying on a quarterly cash flow forecast to help you make informed decisions, this blog centers on helping you get a cash flow forecast established while presenting the main benefits of this tool.

First, how to create the 13-week cash flow and then how to use it to benefit your business.

How to develop a 13-week cash flow forecast

Start by establishing a spreadsheet capturing cash receipts and cash disbursements, starting with week one. Record both your business’ spending and receipts for the first week and then estimate the remaining 12 weeks, including planned expenditures such as overhead (e.g., rent, utilities), payroll, and loan payments. Next, add in your business’ inventory purchases and project your receipts based on history or recent assumptions.

With the spreadsheet populated, you can now analyze your cash situation with scenario planning using ‘what if’ analysis. For example, if the forecast for the upcoming quarter shows that you will run out of cash in week seven, you have time to make informed decisions in advance of the shortfall. If you have excess cash, you may consider paying down loans or putting the cash into savings.

If forecasting a cash shortfall, options might include:

• Accelerate the collection of account receivables.
• Access your line of credit.
• Schedule payables based on terms of payment.
• Defer expenditures.

Cash flow forecasting is a productive way to manage your business and make timely informed decisions to put you and your business in the best position.

Three benefits for creating and maintaining a quarterly cash flow forecast.

1. As a business owner you now have an important reference to know your cash needs for the quarter, which is especially important in instances of volatility including seasonality. Keeping track of actual cash flow as compared to the forecast by week is an asset to any business owner to gain knowledge and to continue to refine future cash flow forecasts.
2. Informed decision making. Clients gain insight into how the upcoming weeks are predicted to look, enabling them to think through decisions vs. having to react to a crisis.
3. Establishing this tool will assist in developing a budget for your business.

Information is power. For any business owner, knowing what your cash situation is this week and throughout the next quarter is essential. Our accountants help our clients across many industries create and analyze 13-week cash flow forecasts. Learn more about our accounting and cash flow services here. Please contact us to discuss how we can help you and your business