The rolling cash flow forecast
Profit is an opinion; cash is a fact. A rolling forecast of thirteen weeks is the smallest model that gives enough warning to do something about a shortage.
Structure
| Line | Contents |
|---|---|
| Opening balance | Bank position at the start of the week |
| Receipts | Card settlements, invoices due, marketplace payouts |
| Supplier payments | By supplier, on agreed terms |
| Fixed outgoings | Salaries, rent, subscriptions, insurance |
| Tax | Value added tax and payroll dates |
| Closing balance | The number that matters |
Why weekly
Monthly figures hide the pattern inside the month. Salaries, tax and supplier payments cluster, and a company can be comfortable on the first and short on the twenty-fifth. Weekly resolution shows that; monthly does not.
Rolling, not fixed
Each week the oldest column is closed with actual figures and a new one is added at the end. The horizon stays thirteen weeks, and the comparison between forecast and actual improves the estimate every time.
Marketplace timing
Payout schedules from marketplaces and payment providers are the most common source of surprises. Reserves, rolling holdbacks and settlement delays should be modelled as they actually occur rather than as an average.