Cash Flow Management, and the 13-Week Forecast

The tool that closes the gap is a 13-week rolling forecast, and you can build one in an hour.

Why 13 weeks

Long enough to see a problem coming while you can still act. Short enough that you can forecast at the level of individual invoices rather than guessing at averages.

A monthly annual budget will not save you. It hides the week in month four where payroll and rent land three days before your largest customer pays.

How to build it

One row per week across 13 columns.

Start with your actual bank balance today. Not your ledger balance, your bank balance.

Then list money in, by named customer and invoice, in the week you actually expect it. Not the due date. The date that customer usually pays, which is a different number and you know it.

Then money out. Payroll on its date. Rent on its date. Suppliers by named supplier. VAT payments. Loan repayments. Anything annual that falls in the window.

Closing balance carries to the next week.

What to look at

The lowest point, not the ending balance.

A forecast that ends at AED 400,000 and dips to negative AED 60,000 in week seven is a forecast of a problem. The ending figure is irrelevant if you cannot survive week seven.

Update it weekly

This is the part people abandon, and it is the part that makes it work.

Every week, replace the forecast week with what actually happened and add a new week 13. Fifteen minutes.

The discipline also teaches you which customers pay when, which is the most valuable thing in the whole exercise.

The five levers when the dip is coming

In the order to use them.

1. Invoice faster. Most small companies invoice late. The clock does not start until you send it.
2. Chase earlier. Call before the due date, not after. It works and almost nobody does it.
3. Ask suppliers for terms. A supplier who wants to keep you will usually agree, and the ones who will not are worth knowing about.
4. Delay discretionary spend. Not payroll, not rent, not tax.
5. Fund the gap. Deliberately, in advance, at a rate you negotiated rather than in a panic.

What not to do

Do not delay VAT or Corporate Tax payments to manage cash. That converts a cash flow problem into a compliance problem with a federal authority.

Do not stop paying staff on time. The damage lasts longer than the shortfall.

Do not extend payment to your smallest suppliers first. They can least afford it and they will remember.

The measure worth tracking

Days between doing the work and having the money. Not debtor days alone. The whole cycle, from job complete to cash received, including how long you take to invoice.

Most small companies find the delay is on their own side.

Where we fit

We build these with clients and keep them updated as part of the bookkeeping. Send us your debtor and creditor listings and we can build the first one.