13 Week Cash Flows – An Effective Tool for CEOs and CFOs

The 13-week cash flow has emerged as an indispensable tool to help our clients actively managing cash flow in businesses where cash flow is tight.

By the way, this does not mean that a business is in trouble – rapid growth is just as likely to cause a cash flow crunch as is operating at a loss.

Unlike the common practice of backing into an estimated cash flow based on high level working capital assumptions, the 13-week method is built upon a strong understanding of the underlying cash sources and uses in a business.

Fundamentally, the 13 week cash flow estimates detailed weekly receipts based on revenues, offset by weekly cash expenditures organized by type (e.g. payroll, inventory purchases, taxes, other vendor payments, etc.).  Experience with our clients has taught us that the most important step in creating a 13-week cash flow is to perform an estimate-to-actual comparison each week against the just completed week.

An increasing number of savvy investors and finance institutions are asking for, or even requiring, 13-week cash flow forecasts…an indication that a business has a good handle on short-term cash needs and is less likely to be caught by surprise – a very good thing in the mind of a bank or investor!

There are many websites discussing the merits of 13-week cash flows and the one from wikicfo.com is just one good example.

David Chase has experience in small to medium private companies and large public companies as a senior operational and financial leader.  With 14 years in finance, a CFO of multiple entities and divisional EVP experience, Dave has a breadth of experience.  Dave has led or been instrumental in raising multiple rounds of equity and debt in excess of $450 million.


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