Profits are great, but cash is king! You may have heard this colloquial phrase used when analyzing businesses. It refers to the importance of cash flow in the overall fiscal health of a business. Many owners ask how it is possible that my revenues are up, my margins are up, and operating expenses are in line, but I am bleeding cash.

Typically, the answer is embedded in the three core working capital drivers, accounts receivable, inventory, and accounts payable, not to mention payroll and other cash outlays for long-term debt, interest payments, etc.

Let me introduce the Rolling 13-Week Cash Flow Forecast. This is a powerful reporting tool that will give you a 13-week look at projected cash balances. The 13 weeks is a rolling 13 weeks in that it always populates the most current 13-week date range. As one knows, the accuracy of a forecast degrades as the forecast range increases, so 13 weeks is a good balance between accuracy and range.

The Rolling 13-Week Cash Flow Forecast reflects current cash balances and adjusts for the net change in collections and disbursements. Cash collections come from current accounts receivable and receipts from future sales and line of credit (LOC) draws, while cash disbursements reflect current accounts payable, future operating expenses, payroll, interest payments, and line of credit repayments.

You will note LOC is mentioned in both the cash collections and cash disbursements cycles. That is because the LOC is often the lifeline of most businesses. The Rolling 13-week Cash Flow Forecast also keeps a close tab of how much LOC is available, adjusting for draws and repayments. Banks generally request a 13-week Cash Flow Forecast because it allows the bank to gauge covenant risk and your ability to service debt obligations. It also demonstrates that you have strong financial controls in place to identify potential liquidity shortfalls enabling you to take prompt action to resolve those issues. Alternatively, it could point to excess cash needing to be re-allocated to pay down high-interest debt.

Like any financial forecasting tool, it’s only as good as the data that supports the forecast. It must be accurate, and it must be timely.

We can assist in setting up this critical hands-on management tool, including training your team on how to update properly. Once in place, it’s a report you cannot do without. Give us a call.


Mike is a CPA with Burke & Schindler and can be reached at mcapozzoli@burkecpa.com or direct by calling his office at 513.455.8200.

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