Finance and Bookkeeping - Session 15

The 13-Week Cash Forecast

Prepare a weekly cash forecast from expected receipts and dated obligations. Explain the lowest projected cash balance, the assumptions behind it and the decisions the CEO should consider before a payment shortfall occurs.

The MSP finance task

The bank holds cash today, but payroll, card payments and equipment orders fall on different dates. A weekly forecast shows whether expected collections arrive before those payments and which week needs a decision.

Weekly cash forecast

A cash forecast estimates receipts, payments and balances. Use payment dates rather than revenue and expense posting dates. Maintain thirteen future weekly columns.

Opening cash

Supplied October 6 bank balances total $312,490.80. This reported figure needs reconciliation, restriction checks and dated commitments before it establishes available cash.

Collection dates

Receivables are amounts owed by customers. Use invoice aging and supported collection dates. A billed amount does not establish the week cash will arrive.

Payment commitments

Include payroll, taxes, suppliers, cards, debt and approved purchases. Confirm actual payment dates. Payroll synchronization dates transfer records and may differ from bank outflows.

Closing cash formula

Closing cash = opening cash + receipts - payments. Practice example: $40,000 + $20,000 - $18,000 = $42,000. Carry that balance into the next week.

Interim cash pressure

A delayed receipt can lower interim cash while leaving final cash unchanged. Inspect daily timing when a major payment occurs before a receipt within the same week.

Forecast updates

Replace completed weeks with actual movements. Explain amount and timing differences. Move an unpaid receipt to its supported new date without duplicating it.

Cash decision list

The admin manager prepares sources and checks. The CEO reviews the lowest balance, uncertain collections and response options before approving new commitments.

Opening cash is $40,000, receipts are $20,000 and payments are $18,000. What is closing cash?

1. $42,000
2. $38,000 after subtracting the net movement
3. $60,000 before the payment schedule is considered
4. $22,000 with receipts excluded

A $10,000 receipt moves from week two to week four, with no other change. What can happen?

1. Ending cash increases by $10,000
2. Interim cash falls while final cash is unchanged
3. Profit decreases by the whole receipt amount
4. The payment obligations automatically move with the receipt

The first-day invoice batch is already included in opening receivables. How should the forecast handle collections from that batch?

1. Count them as both existing receivables and new billing receipts
2. Exclude them because revenue has already been recorded
3. Schedule collection once from the existing invoice detail
4. Add the invoice total to opening cash before payment

Key terms

Three points to remember

1. Reconcile opening cash and schedule movements once.
2. Check the lowest balance and the timing within pressured weeks.
3. Update actuals, assumptions and decisions as the forecast rolls forward.