Why a 13‑week forecast works
A rolling 13-week cash forecast is long enough to see problems coming, but short enough to be updated weekly without turning into a research project.
The framework
- Start with opening cash (today’s available balance + known restrictions)
- Add expected inflows (AR collections, card settlements, other receipts)
- Subtract expected outflows (payroll, AP runs, taxes, debt service, capex)
- Track variance (forecast vs actual) to improve assumptions
Make it believable
- Use “base + upside + downside” for lumpy receipts.
- Separate timing risk from amount risk.
- Assign owners: AR owns collections assumptions, AP owns payment runs.
Common pitfalls
- Mixing booked revenue with cash receipts
- Ignoring cutoffs and settlement delays
- Not capturing one-off items (taxes, bonuses, annual renewals)
A simple weekly ritual
Every Monday: update actuals from bank activity, refresh next 4 weeks with the latest AR/AP info, and review liquidity headroom against minimum cash targets.