Cash
Why the P&L and the bank balance can't answer the question every owner asks, and the simple weekly view that can.
Ask most owners whether they'll have enough cash in eight weeks and you'll get one of two answers: a look at the bank balance, or a shrug. Neither is a forecast.
The P&L can't answer it either. It tells you what you earned, not when the money arrives or leaves. A profitable month can still end with the cash stuck in debtors, and a quiet month can be followed by a quarter's super, an activity statement and an insurance renewal in the same fortnight.
A 13-week cash forecast is a quarter, laid out one week at a time:
Mark the cash buffer the business must always keep. Any week below that line is the one to act on, now, while there's time to chase a debtor, move a payment or talk to the bank.
Payroll goes out weekly or fortnightly, so a monthly view hides the week in the middle where cash runs short. Thirteen weeks is long enough to see every lump in a quarter, and short enough to stay accurate: you know who owes you what and when.
Each week, replace last week's forecast with what actually happened, drop it, and add a new week 13. Then check the lowest week. That's it. The forecast gets better every week, because you see where your guesses were wrong.
Our free guide walks through it step by step, with the lines to include and the four ways receipts get overstated, and comes with an Excel template that flags any week below your buffer.
General information only, not tax, legal or financial product advice. Your registered tax or BAS agent handles tax and your activity statements.
How to build a 13-week cash forecast, what goes in it, the lumps that catch owners out, and a free template to fill in.
Email contact@ledgerlift.com.au with "guide" in the subject and it comes straight back.
You'll get the guide and the occasional useful email from LedgerLift. Unsubscribe any time.
The free Financial Health Check: read-only Xero access for 48 hours, your score out of 100, your top three priorities and what each is costing you, and a 30-minute call. Request it here.