Hey GirdleyWorld!
We’re keeping things nice and simple this week. I’m giving you what you need to keep your business afloat in a cash crisis:
- The 13-week rolling cash flow forecast
The download link is below!
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The hard truth
Businesses die when they run out of money.
When your business enters a crisis period, the 13-week Rolling Cash Flow Forecast is your tool to keep the doors open.
It’s a simple but powerful accounting exercise that gets you hands-on with your business’s financial health.
Why 13 weeks?
If your business is in trouble, monthly or quarterly cash flow projections should be more specific.
Thirteen weeks is a short enough time, to be precise. You don’t have to be pulling numbers out of the air. Your estimates will be accurate enough to be actionable.
And it’s long enough to see your problems while you still have time to fix them.
Can’t my accounting software do this?
Probably it could. But a lot of accounting tools have either dirty or incomplete data.
There’s also something visceral about entering these numbers yourself. Touching your data is touching your business.
First, download your template for the 13-Week Rolling Cash Flow Forecast. Then I’ll walk you through it.
Using the template
1. In cell C3, enter this Monday’s date. The next twelve weeks will automatically update.
2. Fill in your current cash, and the cash coming in this week. That’s row 4 (current cash available in your accounts), and rows 7-9 (how much cash we will collect this week).
3. Fill in your expenses. List the cash that’s going out from operations. This list covers a lot of the standard expenses, but accounts for your unique expenses on the “Other” rows.
4. Check your ending cash position. The spreadsheet will automatically calculate your end- of-week position. Of course, you want your cash to stay above zero for the next week.
5. Accounts receivable & 6. Accounts payable
Receivable = money owed to us (like suppliers). Payable = money we owe (like vendors). These are often on “terms”, like net-30, so we want to forecast when they’ll be paid. Enter current ones and new ones, and slot them in where they’re due.
That’s it. Keep this up to date every week. Stay in touch with the numbers that matter.
Usually, you’re here because your bank account is nearly empty.
That’s when you earn your keep as CEO.
Your job is to stretch your cash. That might mean:
- Delaying payments
- Renegotiating with vendors
- Expanding your borrowing
- Raising more cash
- Getting paid early
You’re buying time to fix the problems that got you in this mess!
Good luck!
If you didn’t download it before: here’s the link again to the template!
3 things from this week
- Appetizer: I went on Hubspot's Truth, Lies, and Workplace Culture podcast a little while ago to talk about the future of work, generational differences, and learning how to learn. You can check it out here!
- Main: A business might make millions for the owner but still be worthless to a buyer. My friend Sieva Kozinsky breaks down how to build a business to sell. A highly recommended read - one-click subscribe here!
- Dessert: It’s the little things that count.
That’s all for now! Have a great week!
Michael
