ACCOUNTING & FINANCE TOOL
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13-WEEK CASHFLOW TOOL ONE-PAGER 13-WEEK CASH FLOW PREPARATION PROCEDURES The purpose of preparing a 13-week cash flow is to avoid running out of cash at any given point. 13 weeks are used because it ensures monthly and quarterly debt payments are included and is more predictable than outer months. The following are steps required to prepare a 13-week cash flow: 1. The first step in preparing a 13-week cash flow is gathering required information. Solid information on forthcoming cash receipts, operating expenses and other cash disbursements must be identified. The major information that needs to be obtained is the beginning cash balance, estimated cash receipts (i.e., revenues from each business line), estimated cash outflow (e.g., cost of sale for each business line, operating expenses, loan payments, etc.). 2. The second step to be taken is to create an excel spreadsheet that shows the weeks across the top, tracking the inflows and outflows of cash. There should be a column for actual cash flow next to the budget each week so that you can compare actual activities to forecasted activity.
Create rows cash flow activities (i.e., cash flow from operations, cash flow from investing and cash flow from financing).
Under each activity create rows for large sources and uses of cash. For example, payments from large customers, payments to large vendors, salary expense, loan payments, etc.
Enter your regularly scheduled payments (salary expenses, loan payments, utilities, etc.) in the weekly outflow’s column.
Enter your vendor payments when they are scheduled to be paid, per your accounts payable aging.
Enter your customer cash receipts when they are to be received, per the accounts receivable aging.
The total inflows less the total outflows equal net cash flow for the week.
The weekly net cash flow less the beginning cash balance must equal ending cash balance.
3. The third step in preparing a 13-week cash flow is monitoring and updating the cash flow. After the estimated forecasts have been input, the numbers should be monitored against actuals. 4. The fourth step is to look out for common mistakes that could be made when building the 13-week cash flow.