Direct answer: Profit reports accounting results for a period. A 13-week cash forecast estimates when money will actually arrive and leave. Customer terms, inventory purchases, payroll, taxes and parent funding can create a weekly cash shortfall even when the business reports profit.
Thirteen weeks roughly covers a quarter and supports frequent updates. It is a management convention, not a legally required period for every business.
Step 1: Start with available cash
Reconcile bank balances and identify funds that are actually usable. Restricted balances and unapproved financing should not silently inflate available cash. Forecast each entity before building a group view so intercompany transfers are not counted as new group receipts.
Step 2: Schedule cash movements by week
Estimate collections from invoices, terms, payment history and current information. Schedule payroll, rent, taxes, purchases, freight, equipment and debt service. Inventory purchases do not necessarily match current-period cost of sales, and principal repayments use cash even though they are not operating expenses.
Identify the approval status and expected timing of parent support. Unconfirmed equity or loans belong in a separate scenario (for the tax side of the equity-vs-loan choice, see funding a U.S. subsidiary).
Step 3: Find the low point
The following fictional example shows the first four weeks of a 13-week model, in USD thousands. It assumes no additional financing and a management-selected cash buffer of 60, not a regulatory minimum.
| Item | Week 1 | Week 2 | Week 3 | Week 4 |
|---|---|---|---|---|
| Opening available cash | 120 | 90 | 50 | 60 |
| Expected receipts | 80 | 60 | 95 | 85 |
| Expected payments | 110 | 100 | 85 | 105 |
| Closing cash | 90 | 50 | 60 | 40 |
| Shortfall against the 60 buffer | 0 | 10 | 0 | 20 |
Closing cash equals opening cash plus receipts less payments. Each closing balance becomes the next opening balance. Buffer shortfall equals the greater of zero and 60 less closing cash.
Weeks 2 and 4 fall below the chosen buffer. Do not add 10 and 20 and describe 30 as the financing requirement: these are weekly balance conditions, and the funding calculation must consider timing, subsequent balances and the buffer you want to maintain.
Step 4: Turn the shortfall into decisions
Compare specific collection efforts, agreed supplier arrangements, nonurgent purchases and approved funding. Respect contractual and statutory obligations when modeling changes — payroll and taxes are not levers for making the model look better. Keep a downside scenario for slower collections, larger purchases or delayed funding.
Step 5: Update weekly against actuals
Each week, compare actual results with the forecast, separate timing differences from amount differences and new events, then add a new thirteenth week. If collections are consistently forecast too early, change the method. Align the weekly forecast with the assumptions in the monthly budget so the two models do not carry different hiring and purchasing plans.
The 13-week forecast is a standard deliverable of a fractional CFO; its reliability depends on controller-level accounting quality, and it should share one reporting basis with the monthly package for headquarters.
