Thirteen Week Cash Flow Report
Modified on 2010/05/12 15:01 by swathen — Categorized as: Uncategorized
Cash Flow Statement
Cash Flow After Tax
How to Develop a Daily Cash Report
How to Prepare a Flash Report
13 Week Cash Flow Report: Definition
13-Week Cash Flow Report
, defined as a method to forecast the cash flow needs of a company, is commonly used in businesses with complicated cash cycles. This tool is especially useful in a situation where active cash management is required. The 13 Week Cash Flow Model is used best as a "big picture" tool to see how much cash is required on a forward rolling basis. Having a clear sense of your working capital needs and when you need it gives added impetus to collect cash and/or to generate revenue.
This tool is also helpful when used in conjunction with the daily cash report. It is helpful to think of the 13-Week Cash Flow report as giving you the strategic big picture needs, while the Daily Cash Flow Report provides a more tactical level measure of the firm's cash position.
13 Week Cash Flow Report: Meaning
For a 13 week cash flow report, meaning the report used to project cash flow expectations into the coming weeks, a strong understanding creates the foundation to make valuable models. There are several key areas of information that you will need to obtain: beginning cash balances, estimated cash receipts, estimated payroll and taxes, estimated operating expenses, note/lease payments, payments on LOC-ML and payments on old
The 13-Week Cash Flow Report should be used in the active cash management of the company. The tool should be updated and reviewed on a weekly basis by the CFO/Controller.
thirteen week cash flow model
should be prepared and updated by the CFO/controller. The CFO/controller should be the one to setup and prepare the template. Information to populate the template will most likely reside with the persons in Accounting and HR.
Maintenance and updating should be done on a weekly basis.
13 Week Cash Flow Report: Modeling
In a 13 week cash flow report, modeling the proper information is essential to creating meaningful statements. First, information must be collected to assure that numbers, concepts, and processes are added to the report with regard to the regular business operations. An accounting firm will have a completely different 13 week cash flow forcast than an e-commerce store.
Second, financial information must be input in the proper places in the report. Incorrect reporting leads to useless statements, so the maker must take great care to avoid mis-entry or confusion.
Lastly, the report must be monitored and updated consistently. Without constant attention and changes, the report quickly becomes outdated and useless.
Accumulate Information for Thirteen Week Cash Flow Projection
Garbage in ... is Garbage Out. The integrity of your forecast will depend on your ability to obtain solid information on forthcoming cash receipts, operating expenses, payroll and other cash disbursements such as notes and old A/P.
There are several key areas of information that you will need to obtain information: beginning cash balance, estimated cash receipts, estimated payroll and taxes, estimated operating expenses, note/lease payments, payments on LOC-ML and payments on Old A/P.
Information on the above items will need to be gathered for each week. It may be helpful to make a list to see what items occur on a weekly basis versus a monthly or quarterly basis. For instance, certain payroll disbursements may be a weekly occurrence. Yet, some expenses or note payments may occur on a monthly or quarterly basis. Make a schedule of when payroll goes out. Some firms may have different pay days for different groups of employees.
Input Financial Information
After information has been gathered, the next task will be to key in the information into the spreadsheet. Make sure you are keying the information into the correct week. Depending on the number of disbursements or cash receipts of your company, you may want to consider separate tabs that list out all the associated receipts and disbursements for each week. You can then sum up all the disbursements or receipts and link them to the summary page. This way, it will be very easy to make changes in a clear manner.
Most of the information should reside in the accounting department. Payroll and Payroll taxes may be handled by a separate HR person.
Be sure to input the beginning cash balance for the 1st week that you are starting. Have a separate tab for each group and link back to the summary page (i.e. a separate tab for payroll, operating expenses, etc.)
Monitor & Update
After you have input your estimated forecasts, you will want to monitor and review against actuals. As each week passes, you may want to consider dropping in the actuals into the spreadsheet. It is worth mentioning that the actual cash receipts and cash disbursements can be tied to the Daily Cash Report.
Monitor and review weekly. As each week passes, drop in actuals into the spreadsheet. You can relate this back to the Daily Cash Report. After you drop in actuals, make sure to double check your forward-rolling assumptions on cash receipts and disbursements. Has anything changed? You may also want to take this time to add another week so that you always maintain a 13-week forward rolling schedule.
Use color to mark the difference between actuals and forward rolling estimates. Use graphs to help in trend analysis.
13 Week Cash Flow Report: Example
Stanlee is the head bookkeeper for a retail boutique. Stanlee appreciates working with small vendors, where the work environment is more relaxed and his efforts carry more effect on the business.
This week, the company owner decided to deepen her understanding of financial statements for business. She has asked Stanlee to create a
13-week cash flow report
. Stanlee sits down to prepare these statements.
Stanlee begins by accumulating proper information. He looks through quickbooks, bank statements, business credit card statements, and a few other forms. With these, Stanlee finally has the background he needs to create the report. He moves forward data entry.
Stanlee begins inputting information for the 13 week cash flow analysis. He looks at end of period cash balances in the bank, credit card payments due, and anything else that effects cash flow. Stanlee enters this information fully and checks his work to ensure completion.
Next, Stanlee monitors the statement. He, after finishing, takes some time to look at the report. Stanlee is shocked to find that at the end of the 13 week period the company will not be able to complete payment of all accounts payable. This worries Stanlee greatly. He takes a few more moments to create a potential plan of action. He resolves that if the store owner, a woman with impeccable credit, opens an additional business credit card she will be able to meet her cash needs. Then, from the increased sales volume due to opening of the spring season, the owner will be able to pay back the credit card balance before having to make a payment.
What could have been a major catastrophe is now a simple matter. The owner of the boutique thanks Stanlee, gives him a nice bonus, and decides to always have 13-week cash flow reports on hand.
13 Week Cash Flow: Template
13 week cash flow forecast template
is available from Microsoft Office