Worked example / fictional demonstration
How a 13-week cash forecast reveals a payment shortfall
Fictional demonstration. All businesses, records, figures and scenarios on this page are invented for illustration. This is a sample of the approach and deliverable, not a client case study, testimonial or achieved result.
A fictional agency starts with $20,000 of unrestricted cash. It expects $138,000 of receipts and $130,000 of payments over 13 weeks. Leadership wants to know whether it can meet commitments if a large customer pays late.
Set up the forecast
Begin with the available bank balance and reconcile it to the books. List customer receipts by expected collection week, then list payment obligations by their expected payment week. Carry each week’s ending cash into the next week’s opening balance.
Formula: ending cash = opening cash + cash receipts − cash payments. Use expected receipt dates, payment due dates and documented assumptions. Revenue earned and invoices issued are not themselves cash receipts.
Illustrative inputs
- Opening unrestricted cash: $20,000, after all earlier payments.
- Weekly payments: $6,000 to contractors, $2,000 for payroll, $1,000 in operating costs and $1,000 in scheduled tax payments, totaling $10,000. This fixed schedule simplifies the example; live schedules use actual amounts and dates.
- Management’s minimum cash reserve: $5,000. This is an illustrative policy choice.
- Delayed-collection scenario: one $12,000 receipt moves from week 5 to week 10. All other receipts and payments stay on schedule.
- No borrowing, owner distributions, capital purchases or other cash flows are assumed.
The 13-week cash schedule
| Week | Base opening | Base receipts | Payments | Base ending | Delayed ending |
|---|---|---|---|---|---|
| 1 | $20,000 | $8,000 | $10,000 | $18,000 | $18,000 |
| 2 | $18,000 | $0 | $10,000 | $8,000 | $8,000 |
| 3 | $8,000 | $12,000 | $10,000 | $10,000 | $10,000 |
| 4 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 |
| 5 | $10,000 | $12,000 | $10,000 | $12,000 | $0 |
| 6 | $12,000 | $18,000 | $10,000 | $20,000 | $8,000 |
| 7 | $20,000 | $8,000 | $10,000 | $18,000 | $6,000 |
| 8 | $18,000 | $12,000 | $10,000 | $20,000 | $8,000 |
| 9 | $20,000 | $0 | $10,000 | $10,000 | ($2,000) |
| 10 | $10,000 | $18,000 | $10,000 | $18,000 | $18,000 |
| 11 | $18,000 | $10,000 | $10,000 | $18,000 | $18,000 |
| 12 | $18,000 | $15,000 | $10,000 | $23,000 | $23,000 |
| 13 | $23,000 | $15,000 | $10,000 | $28,000 | $28,000 |
13-week reconciliation: $20,000 opening cash + $138,000 receipts − $130,000 payments = $28,000 ending cash in both scenarios. The delayed scenario changes timing within the forecast, so its final balance is unchanged.
The decision hiding inside the forecast
The base forecast reaches a low of $8,000 in week 2, which is $3,000 above the illustrative reserve. Under the delayed scenario, cash reaches $0 in week 5 and a projected shortfall of $2,000 in week 9. Maintaining the $5,000 reserve through that low point would require $7,000 of additional available cash or an equivalent agreed timing improvement.
A negative projected balance flags payments the business cannot fund under these assumptions. It does not assume the bank will permit an overdraft. Weekly ending balances can also hide a shortage earlier in the week.
A sample recommendation
Before week 5, confirm the customer’s payment status, invoice acceptance and expected collection date. Compare a mutually agreed collection or payment schedule with available funding options. Establish a specific contingency before approving further discretionary commitments. Client leadership approves financing and any changes to commercial terms.
| Timing | Owner | Action |
|---|---|---|
| Now | Client receivables lead | Validate the $12,000 receipt date and any payment dispute |
| Before week 5 | Client leadership | Agree a funded contingency and review discretionary commitments |
| Each week | Finance lead | Replace forecasts with actual receipts and payments, and explain differences |
| At each weekly review | Leadership and finance | Add a new week so the outlook continues to cover 13 weeks |
What the client receives
The sample deliverable consists of the weekly schedule, an assumptions register, a delayed-collection sensitivity, the minimum cash balance and a decision brief with named actions. Each update should distinguish confirmed amounts from estimates and show which timing changes drove the result.
For a live engagement, see Growth monthly financial advisory, which includes an agreed 13-week cash outlook using client-supplied reconciled books. For the related cost-review example, read the contractor spending review.
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