Insights / Cash flow
Profitable businesses run out of money all the time. It's one of the most common ways a fundamentally good company dies, and the owner almost never sees it coming — because they were watching the wrong report.
Your P&L says you made money last month. That's a real fact, and it will not help you on the Friday you can't cover payroll.
Your profit and loss statement is built on accrual accounting: revenue is recorded when you earn it, expenses when you incur them. It's the right way to understand whether the business model works.
But money doesn't move when you earn it. It moves when someone actually pays you.
Invoice a customer $80,000 in March on net-60 terms. Your March P&L shows $80,000 of revenue. Your bank account in March shows nothing. Meanwhile you paid your team, your rent, and your suppliers in March — in cash, on time.
March was profitable. March was also the month you nearly went under. Both statements are true and only one of them shows up in your reporting.
Profit is an opinion about a period of time. Cash is a fact about a specific day. You can survive a bad opinion. You cannot survive a Friday with an empty account.
It's a spreadsheet. That's it. Thirteen columns, one per week for the next quarter. Three sections:
The output is one number per week: what's in the bank at the end of it. Thirteen numbers, on one page.
If any of them are negative, you now know about a problem that's weeks away instead of days away. That distance is the entire value of the exercise.
It's a quarter — long enough that you can still do something. Thirteen weeks is enough runway to collect a receivable, delay a purchase, draw on a line of credit, or have an uncomfortable conversation early instead of desperately.
Shorter than that and you're just watching it happen. Longer and the numbers become guesses — nobody knows their week-38 receipts.
This is the big one, and it defeats the whole tool. If a customer's terms are net-30 and they reliably pay at day 45, the money goes in week seven. Not week one. Not week five. Forecast the customer you have, not the one on the contract.
Quarterly taxes. Annual insurance. The equipment deposit. Three-payroll months. These are exactly the items that turn a comfortable week into a crisis, and they're the ones that get left out because they aren't part of the normal rhythm.
An unsigned deal is not cash. A verbal yes is not cash. If it isn't contracted and creditworthy, it doesn't belong in the forecast. Optimism is a fine quality in a founder and a catastrophic one in a cash forecast.
A forecast built in January and never touched is worse than none at all — it's confidently wrong. Update it weekly. It takes fifteen minutes once it exists.
The point isn't the spreadsheet. It's the decision the spreadsheet gives you time to make.
You see week nine goes negative by $22,000. It's currently week two. You now have seven weeks — a very long time — to do any of the following calmly:
Every one of those options exists in week two. In week nine, only the last-minute ones do — and those are the expensive ones. Same problem, wildly different cost, and the only variable is when you found out.
The honest version: most owners we meet don't have this, and most of them are fine — right up until the month they aren't. It's insurance, and like all insurance it feels pointless until precisely the moment it doesn't.
You do not need software. Open a spreadsheet. Thirteen columns. Put your current bank balance in the first cell. List what's coming in and what's going out, week by week, for a quarter.
The first version will be wrong. Build it anyway — being roughly right about your cash beats being precisely right about last month's profit.
We build these for clients as part of CFO advisory — and we'll walk you through your first one on a call, free.
Book a call