A 13-week forecast does not try to predict the whole year. It reaches far enough to include payroll, suppliers, taxes and major receipts, yet remains short enough for every figure to have a specific source.
Profit, bank balance and forecast cash are not the same
| Measure | What it tells you | What it can hide |
|---|---|---|
| Profit or loss | Income less expenses recognised in the period | When the cash will be received or paid |
| Bank balance | Money available now | Committed payments and unreconciled movements |
| Cash forecast | Expected balance after receipts and payments | Events not yet included |
Build it from the bank, not from the budget
- 01Set the opening balanceStart with reconciled bank accounts and the actual cash on hand. An unreconciled accounting balance carries the same error through all thirteen columns.
- 02Add expected receiptsWork invoice by invoice, using the probable collection date rather than only the due date. Separate confirmed, probable and uncertain receipts.
- 03Add expected paymentsSuppliers, payroll, rent, loans, insurance, taxes and investments, including payments that are not yet invoiced.
- 04Calculate the minimum balanceFor each week, add inflows, subtract outflows and examine the lowest point—not only the closing balance.
- 05Write down the decisionIf you move a payment or change an assumption, record why. The following week, you will be able to distinguish a forecasting error from a management decision.
Three scenarios, not thirty
- Base case: what you expect to happen based on the information available.
- Stress case: key receipts arrive later, sales are lower or an unexpected expense occurs.
- Action case: the outcome after specific measures, such as renegotiating terms, postponing an investment or accelerating collections.
The weekly twenty-minute meeting
- Reconcile the previous week's transactions.
- Replace forecast figures with actuals and explain material variances.
- Update collection dates using commercial information, not hope.
- Add a new week at the end to keep the horizon at thirteen weeks.
- Assign an owner and a due date to every action intended to protect the minimum balance.
You do not need a long meeting or a decorative report. The forecast should show the opening balance, inflows, outflows, closing balance, weekly minimum and the five to ten items that explain the risk.
Andorran Chamber of Commerce, Industry and Services Cambra de Comerç, Indústria i Serveis d'Andorra
Signs that the forecast is unreliable
- The opening balance does not agree with the reconciled bank accounts.
- Every customer is assumed to pay exactly on the due date.
- Taxes appear the day before you file them.
- Recurring bills are there, but payroll, loans or investments are not.
- The previous week's variances are erased instead of explained.
- No one owns the actions triggered by a low balance.