A rolling 13-week cash flow forecast shows what will go in and out of the bank each week for the next quarter. It is detailed enough to act on this week and long enough to see pressure before it reaches the bank account.
Annual budgets are built for profit. They spread cash into monthly averages and hide the week when payroll, VAT and a loan repayment fall together.
What is it, and what is it not?
- It is a weekly view of actual receipts and payments (the direct method), rolled forward every week.
- It is a decision tool for minimum cash and bank headroom.
- It is not a replacement for the annual budget or a valuation model.
- It is not an accrual profit and loss account relabelled as cash.
How should it be structured?
- Opening position: actual bank balances, with restricted cash such as margin deposits shown separately.
- Receipts: collections from major customers, cash sales and advances, other receipts and financing.
- Payments: suppliers, payroll, rent, VAT and other taxes, loan repayments and interest, and capital spending.
- Closing position: net cash each week against the minimum cash level and available facilities.
How do we keep it accurate?
- Build collections from the receivables ledger and how each customer actually pays, not from sales targets.
- Put VAT, payroll and debt service in the exact week they fall.
- Compare last week's forecast with the actual every week and record the reason for each large difference.
- Keep the assumptions on one page, each owned by a named person in sales, procurement or operations.
Which decisions should it drive?
| If the forecast shows | Typical actions |
|---|---|
| A gap in a future week | Bring collections forward, agree supplier timing, arrange a facility drawdown in time |
| Cash building up | Repay expensive debt, take early-payment discounts |
| A covenant or headroom risk | Talk to the bank before the test date, with the forecast in hand |
What does the weekly forecast routine look like?
- Monday: update bank balances and the actual receipts and payments.
- Tuesday: roll the forecast forward one week and update the assumptions.
- Wednesday: a 30-minute review with the owner or managing director, with decisions recorded.
- Rest of the week: carry out the actions.
Hypothetical example: a trading company sees that in week 7 a large supplier payment, the VAT payment and payroll fall together, leaving cash below its minimum. Six weeks ahead, it agrees a split payment with the supplier and prioritises collection from two slow customers.