The rolling 13-week cash flow forecast, built line by line

What the forecast is for, and what it is not

The forecast answers one question: will the bank balance stay above the minimum we have agreed on, every week, for the next 13 weeks? If the answer is no for any week, you see which week, by how much and why.

It is not a profit report, a budget or a valuation. A company can be profitable on paper and still miss payroll because a large customer pays three weeks late in the same week the HST remittance and rent are due. The forecast exists to catch that collision early.

Step-by-step: building the first version

The first build takes most owners three to five hours with their bookkeeper. After that the weekly update is short.

1. Start from the actual bank balance. Use the cleared balance in the operating account on the Monday you begin, not the accounting-system balance, which may include uncleared cheques.
2. Set the minimum cash line. This is the balance you never want to drop below. A common starting point is one full payroll run plus one week of supplier payments. Write it at the top of the sheet.
3. List receipts from the receivables ageing. Go customer by customer. For each open invoice, place it in the week you realistically expect it to land, based on how that customer actually pays, not on the invoice terms.
4. Add receipts from work not yet billed. Signed work that will be invoiced inside the window, shifted by each customer's normal payment delay.
5. Place payroll on its real cycle. For biweekly payroll, every second week carries net pay plus the source deductions you remit. Your payroll provider or bookkeeper confirms those amounts.
6. Add fixed payments on their dates. Rent, loan payments, lease payments, insurance, software and any instalment you have agreed with a lender.
7. Add supplier payments. Use the payables ageing for known bills, then a weekly estimate for purchases you will make during the window.
8. Add sales tax remittances. Place each GST/HST (or GST and QST in Quebec) remittance on the date your accountant confirms. Collected tax sits in your account but belongs to the government.
9. Calculate the closing balance for each week. Opening balance plus receipts minus payments equals closing, which becomes next week's opening.
10. Mark every week below the minimum line. Those weeks are the agenda for your next management meeting.

The worked example: an 18-person services company

Picture a hypothetical Ontario company with 18 employees, about $2.4 million in annual billing and customers who mostly pay in 35 to 50 days. Its figures for the next quarter:

• Opening balance: $85,000 in the operating account.
• Minimum cash line: $40,000, roughly two-thirds of one payroll run.
• Payroll: $58,000 cash out every second week (weeks 2, 4, 6, 8, 10 and 12), covering net pay and the remittances the payroll provider calculates.
• Rent and fixed costs: $9,500 in the first week of each month (weeks 1, 5, 9 and 13).
• Suppliers: about $11,000 a week.
• Equipment loan: $4,200 a month (weeks 3, 7 and 11).
• HST remittance: $34,000 in week 6, on the date the company's CPA confirmed.
• Receipts: taken customer by customer from the receivables ageing and signed work.

You can check the totals. Receipts over 13 weeks add up to $568,000. Payments total $575,600: payroll $348,000 (6 × $58,000), rent and fixed $38,000 (4 × $9,500), suppliers $143,000 (13 × $11,000), HST $34,000 and loan payments $12,600 (3 × $4,200). Opening $85,000 plus $568,000 minus $575,600 gives the closing $77,400 in week 13.

What the table tells the owner

Week 6 closes at $38,800, which is $1,200 under the $40,000 line. Nothing is wrong with the business; payroll, a slow receipts week and the HST remittance simply land together. Weeks 8 and 10 sit only $8,600 and $8,100 above the line, so there is very little room for anything to slip.

The same quarter with one late customer

Now suppose $22,000 of the week 5 receipts comes from one customer who has started paying late, and the cheque arrives in week 8 instead.

• Week 5 closes at $89,800 instead of $111,800.
• Week 6 closes at $16,800 ($89,800 + $30,000 − $103,000), which is $23,200 under the line.
• Week 7 recovers to $40,600, and week 8 returns to $48,600 once the late payment lands.

One customer's habit, invisible on the profit and loss statement, creates a three-week gap. Seen six weeks ahead, it is a phone call and a decision. Seen on the Thursday before payroll, it is a crisis.

Acting on a shortfall you can see coming

The value of the forecast is the lead time. With five or six weeks of warning, the owner in the example has several ordinary options, roughly in order of cost:

• Collect earlier. Call the slow customer in week 3, confirm the payment date in writing, and offer an alternative payment method if that helps them pay on time.
• Move a discretionary payment. A supplier who has been paid promptly for years will often accept a one-week shift if asked in advance.
• Bill faster. If work finished in week 4 is invoiced the same day rather than at month end, its cash arrives earlier.
• Arrange credit before you need it. A line of credit is far easier to discuss with a lender when the forecast shows a temporary, explained dip rather than an emergency.
• Change terms on new work. Deposits or progress billing on larger jobs reduce the gap between paying staff and being paid.

Pricing and margin problems show up here too, as weeks that never recover. If that is the pattern, the margin by service line guide is the next read.

The Monday variance review

Each Monday, in 30 to 45 minutes, the owner or controller does four things.

1. Replace last week's forecast with actuals from the bank, line by line.
2. Explain every variance above a set threshold, for example $5,000. "Customer X paid a week late" is an explanation. "Timing" is not.
3. Update future weeks for anything learned: a slow payer gets pushed back, a new contract gets added.
4. Add a new week 13 at the far end, so the window always looks one quarter ahead.

After eight to ten weeks, the variance notes become a record of how each customer actually pays. That record is often worth more than the forecast itself, because it shows which accounts deserve tighter terms.

Common mistakes

• Using invoice terms instead of real behaviour. If a customer on 30-day terms pays in 52 days, forecast 52.
• Forgetting collected sales tax is not yours. HST sitting in the account makes the balance look healthier than it is until the remittance date.
• Leaving out annual and quarterly items. Insurance renewals, software contracts and licence fees ambush forecasts that only list monthly costs.
• Building it once and filing it. A forecast that is not rolled forward every week goes stale within a month.
• Letting one person own it alone. The owner should read it every Monday, even if the bookkeeper maintains it.

A short checklist

• Opening balance taken from the bank, not the ledger
• Minimum cash line written at the top
• Every open invoice placed in a realistic receipt week
• Payroll, rent, loans and leases on their actual dates
• Sales tax remittances on dates confirmed by your accountant
• Weeks under the line highlighted
• A recurring Monday slot in the owner's calendar

Where this fits in a consulting engagement

In most engagements the 13-week forecast is built in the first two weeks, because every later decision, from hiring to pricing, depends on knowing the cash position. It sits alongside the owner KPI scorecard, where cash runway is the first line. If you want help building yours and running the first month of Monday reviews, our financial clarity service covers it, and the business diagnostic places it in context with operations and people. Engagement options are on the pricing page. Call, text or email; a short text to (604) 632-4959 describing your payroll cycle and your slowest-paying customers is enough to start.