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A 13-week cash flow forecast: spotting the gap before you need to borrow

A 13-week cash flow forecast shows your money week by week, so you can spot your lowest week early. What to include, and when to talk to a lender.

Reading time 5 min read
Category Business guides
Written by The bizbritain team
A 13-week cash flow forecast lists the money you expect to come in and go out of your business, week by week, for the next three months. Its job is to show you your lowest week before you get there. If you can see a gap weeks ahead, you have time to close it or to arrange finance calmly.
Cash flow is on many owners' minds. According to YouGov, 28% of small and medium-sized businesses put cash flow among their top three concerns for the Budget on 28 October. Only 17% of larger firms said the same.

Section 01

What is a 13-week cash flow forecast?

It is a simple table with one column for each of the next 13 weeks. Each column starts with the cash you expect to have in the bank. You add the money coming in, take off the money going out, and get a closing balance. That balance becomes the next week's opening figure.
Why weekly and not monthly? A monthly forecast can hide a bad week. Payroll might leave on the 25th while your biggest customer pays on the 30th. On a monthly view the month looks fine. On a weekly view you can see the dip.
Keep it rolling. Each week, put in what actually happened, drop the week that has passed and add a new week at the end. You always look 13 weeks ahead.

Section 02

What goes into the forecast

Use the dates money will actually move, not the dates on invoices. These are the lines most owners need:

  1. Money from customers

    Put in the week you expect to be paid, based on how late each customer usually pays. Do not use the due date if they never meet it.

  2. Payroll and PAYE

    Wages go out on payday. If you pay HMRC monthly, your PAYE bill is due by the 22nd of the next tax month.

  3. VAT

    The VAT return and payment are usually due one calendar month and 7 days after the end of each VAT period. A big quarter means a big bill.

  4. Rent, suppliers and loan repayments

    Add the regular bills on the days they leave your account. Include stock you need to buy ahead of a busy season.

  5. Corporation Tax

    For a company with taxable profits up to £1.5 million, the bill is due 9 months and 1 day after the end of its accounting period.

  6. Self Assessment

    Sole traders and partners usually pay on 31 January and 31 July. The January payment can include the balance for last year and the first payment towards this one.

Section 03

Finding your low point

Look along the closing balances and find the lowest one. That is your low point. Ask two questions about it.
First, is it below zero, or below the level you are comfortable with? How much spare cash to keep is your call. It depends on how steady your income is.
Second, what happens if things slip? Move your biggest customer's payment back two weeks and see where the low point lands. A forecast that only works if everyone pays on time is not much help.
Sometimes timing alone closes the gap. You could chase a payment, ask a supplier for longer terms or move a purchase back a few weeks.

Section 04

When to talk to a lender, and which finance fits

If the gap is still there, talk to a lender early. An application made weeks before a gap gives you time to gather accounts and answer questions. An application made in the middle of one is harder, because there is no time left.
Match the finance to the shape of the gap:
Short dips that come and go. An overdraft suits money that goes out and comes back within weeks. If your bank has cut your limit, our 30-day plan for an overdraft cut sets out what to do.
Customers who pay slowly. Invoice finance releases money tied up in unpaid invoices, and it grows as your sales grow. Our guide on invoice finance or a business loan explains how to choose.
A one-off gap. A short-term loan suits a single large payment, such as a stock order or a tax bill.
Lenders will want to see your forecast, your recent accounts and bank statements. To arrange business growth finance through bizbritain, you need at least 12 months of trading history. Does your forecast show a gap that timing alone cannot close? A broker who works on business growth finance can look at the options across a wider range of lenders before your low point arrives.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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