Cash flow6 min read
Know exactly how much cash you have, and how long it will last
A 13-week cash forecast is the single most useful document a CEO can own. Here is how to build one in an afternoon.
Written by: Asaf Moalem · 18 years in corporate finance
Most companies know their bank balance. Very few know their bank balance in six weeks. The gap between those two numbers is where cash surprises live.
Why 13 weeks
Thirteen weeks is one quarter. It is long enough to see payroll, VAT, the big supplier and the slow customer, and short enough that the numbers are real, not hopes.
What goes in
Start with opening cash. Add what will actually be collected, by week, by customer, based on their real behavior, not the invoice date. Subtract payroll, rent, suppliers, taxes and loan repayments on the days they leave. The bottom line, week by week, is your runway.
The Monday ritual
Update it every Monday. Twenty minutes. Actuals replace last week’s estimate, and the horizon rolls one week forward. The forecast is never finished; that is the point.
What it changes
Once you can see week nine, hiring, discounts and the new lease stop being arguments and become arithmetic.