The Profitable Company That Ran Out of Money
Your P&L looks great. Revenue up 40%. Healthy margins. Profitable every month.
Then you get an email from your supplier. The $45,000 inventory order is due. You check your bank account: $12,000.
How did this happen?
The Cash Flow Reality:
- Week 1: Order $45K inventory, pay supplier
- Week 4: Inventory arrives, list on site
- Week 6-10: Sell through inventory
- Week 8-12: Actually receive cash (payout delays)
You're fronting $45K for 7-11 weeks. Scale this across multiple orders and you have a cash flow problem even while "profitable."
A 13-week cash flow forecast prevents this. It shows you exactly when cash comes in and goes out, so you can plan inventory purchases, negotiate terms, or arrange financing before it's a crisis.
Why 13 Weeks? Why Not Annual Budget?
Annual budgets are strategic. 13-week forecasts are tactical.
13 weeks (quarter) is perfect because:
1. It's actionable
You can actually influence next month's cash. You can't change next year's much.
2. It's rolling
Every week, drop week 1 and add week 14. Always seeing 13 weeks ahead.
3. It matches business cycles
Most suppliers: 30-45 day payment terms
Most payouts: Weekly to biweekly
Inventory velocity: 30-90 days
4. It reveals timing crunches
Your business might be profitable over a quarter but have a cash crisis in week 7.
The Basic Structure
Starting Cash (from last week's ending cash)
+ Cash In (payouts, refunds collected, other income)
- Cash Out (inventory, ads, salaries, software, rent)
= Ending Cash (becomes next week's starting cash)
Track actuals vs. forecast weekly. Adjust future weeks based on what you learned.
Building Your 13-Week Cash Flow Model in Excel
-
3
Set Up the Weekly Column Structure
Create columns for Week 1 through Week 13 across the top. Rows will be: Starting Cash, Cash In categories, Cash Out categories, Net Cash Change, Ending Cash. Use actual calendar week dates.
-
3
Forecast Sales by Week
Use last year's sales pattern adjusted for growth. Formula: =VLOOKUP(WEEKNUM(date), historical_sales, 2) * growth_multiplier. Account for seasonality - December ≠ February.
-
3
Model Inventory Purchase Timing
List planned POs: Amount, Order Week, Payment Week, Arrival Week, Sell-Through Weeks. Most critical: Payment Week is when cash leaves. Use supplier terms (Net 30, 50% upfront, etc).
-
3
Add Fixed Operating Costs
List recurring costs: Shopify subscription, apps, payroll, rent, insurance. These hit same week each month. Some weekly (ads), some monthly (software), some quarterly (insurance).
-
3
Calculate Weekly Cash Position
Each week: Starting Cash + Total Cash In - Total Cash Out = Ending Cash. Ending Cash becomes next week's Starting Cash. Conditional format: Red if <$10K, Yellow if <$25K.
-
3
Build Scenario Analysis
Create three versions: Best Case (+20% sales), Base Case (forecast), Worst Case (-20% sales). Keep inventory purchases constant. This shows your cash sensitivity to revenue swings.
-
3
Add Actual vs. Forecast Tracking
Each week, add 'Actual' row under each 'Forecast' row. Calculate variance: =Actual-Forecast. Big variances signal you need to adjust future weeks' assumptions.
The Critical Cash Flow Formulas
1. Sales → Cash In Conversion (with delay)
```excel
=SUMIFS(Sales_Range, Date_Range, >=WeekStart, Date_Range, <=WeekEnd) * (1 - RefundRate)
```
Then shift this forward by your payout delay (2 days, 7 days, etc).
2. Inventory Cash Out (with payment terms)
```excel
=IF(WEEKNUM(TODAY())=OrderWeek, DepositAmount,
IF(WEEKNUM(TODAY())=OrderWeek+PaymentTermsDays/7, Balance, 0))
```
3. Cumulative Cash Position
```excel
=PriorWeekEnding + ThisWeekIn - ThisWeekOut
```
If this goes negative, you have a problem.
4. Runway Calculator
```excel
=IF(WeeklyBurn>0, CurrentCash/WeeklyBurn, "Infinite")
```
Tells you how many weeks until $0 at current burn rate.
Common Cash Flow Patterns and What to Do
Pattern 1: The Seasonal Dip (Predictable)
Symptoms: Weeks 1-4 positive, weeks 5-7 deeply negative, weeks 8-13 recovery
Cause: Q1 inventory purchase for Q2 peak season
Solutions:
- Line of credit to bridge weeks 5-7
- Negotiate Net 60 terms with supplier
- Spread inventory purchases across weeks 1-6 instead of all in week 1
Pattern 2: The Growth Trap (Dangerous)
Symptoms: Sales growing but cash getting tighter each week
Cause: Scaling inventory faster than cash cycles through
Solutions:
- Slow growth rate to match working capital capacity
- Raise equity/debt financing before crisis
- Improve inventory turnover (smaller, more frequent orders)
Pattern 3: The Choppy Burn (Manageable)
Symptoms: Some weeks positive, some negative, trending slowly down
Cause: Variable marketing spend, unpredictable sales
Solutions:
- Build cash buffer (3 months operating expenses)
- Cap marketing spend at % of trailing 4-week cash in
- Smooth out lumpy costs (monthly billing vs annual)
Pattern 4: The Healthy Accumulation (Goal)
Symptoms: Most weeks positive, cash balance growing steadily
Cause: Profitable unit economics + good working capital management
Actions:
- Invest excess cash in inventory to capture growth
- Build 6-month cash reserve
- Plan expansion or shareholder distributions
Stop managing cash by feel. Get automated cash flow projections based on your actual sales and payout patterns.
Forecast My Cash FlowNever get surprised by cash crunches
Common Mistakes to Avoid
Learn from these common pitfalls to ensure success
Forecasting based on order date instead of payout date
Solution: Sales on Monday don't hit your bank until Wednesday (or next Tuesday). Model when cash actually arrives, not when customers click buy.
Not updating the forecast weekly with actuals
Solution: A static forecast is useless. Every Monday, add last week's actuals and roll forward one week. This is a living document.
Treating refunds as negative sales instead of separate cash out
Solution: Refunds happen on different timing than sales. A December sale might refund in January. Track separately.
Forgetting about quarterly/annual costs
Solution: Insurance, domain renewals, annual software subscriptions. These create cash spikes. Add them to the model even if they're 10 weeks out.
Not having a plan when forecast shows negative cash in week 7
Solution: The whole point is early warning. If week 7 goes negative, make decisions NOW (delay PO, cut costs, arrange financing).
How to Verify Your Numbers
Ensure accuracy with these verification steps
Your forecast correctly predicted actual cash position within 10% for the last 4 weeks
You've identified at least one upcoming cash crunch and made a plan to address it
You can explain your cash conversion cycle (days from inventory purchase to cash collection)
You know your minimum cash balance threshold and have alerts when approaching it
Your team updates the forecast every Monday morning without fail
Frequently Asked Questions
How accurate should my 13-week forecast be?
What if I don't have 6 months of history for a new business?
Should I include non-cash items like depreciation?
How much cash buffer should I maintain?
What do I do if my forecast shows I'll run out of money?
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