Why 13 weeks?
When a business is in trouble, the annual budget stops being useful. What matters is next Tuesday: will there be enough in the account to run payroll? A 13-week forecast answers that question week by week for a full quarter.
It works because it’s short enough to forecast with reasonable accuracy and long enough to catch the lumpy payments that sink businesses: two-monthly GST, quarterly insurance, provisional tax, a big supplier bill.
It’s also the document that tells the truth. A 13-week forecast will show, often uncomfortably, whether a proposed IRD arrangement, creditor plan or loan repayment actually fits.
The structure
Set up a spreadsheet with 13 columns, one per week, starting this week. Rows:
Opening balance The cash in the bank at the start of the week.
Cash in
- Sales receipts from customers (when you’ll actually be paid, not when you invoice)
- EFTPOS and card settlements
- Other income, such as GST refunds, asset sales, owner injections
Cash out
- Wages and salaries (net)
- PAYE and other employer deductions (on their due dates)
- GST (on the due date for your filing period)
- Provisional or income tax
- Rent
- Suppliers and stock
- Loan repayments and hire purchase
- Utilities, insurance, software subscriptions
- Owner drawings
- Arrears payments, such as IRD instalments or creditor plans
Net cash flow Cash in minus cash out.
Closing balance Opening balance plus net cash flow, which becomes next week’s opening balance.
How to fill it in honestly
- Use cash dates, not invoice dates. If customers pay in 45 days, the money lands in week 7, not week 1.
- Be conservative on income. Use what’s realistic, not what’s hoped for.
- Be complete on outgoings. Go through the last three months of bank statements and list every regular payment.
- Put tax on the right dates. GST and PAYE due dates are in myIR. Don’t smooth them across weeks.
- Include the arrears. If you’ve agreed or are proposing an IRD instalment or supplier plan, put it in.
- Note assumptions. A short list beside the forecast: “assumes café trading returns to winter levels”, “assumes customer X pays invoice by week 4”.
Reading the forecast
Look at the closing balance row. Where does it go negative? That’s your problem week. Then ask:
- Is it a timing gap or a structural gap? A timing gap is one bad week before a big receipt lands. A structural gap is where outgoings exceed income every week.
- How big is the lowest point? That’s roughly the minimum funding the business needs to get through the quarter.
- What happens if one assumption fails? Rerun it with the largest customer paying two weeks late.
Using it to make decisions
| Question | What the forecast shows |
|---|---|
| Can we afford an IRD instalment arrangement? | Whether current tax plus instalments fits every week |
| Will consolidating our debts help? | Old weekly repayments vs the new one |
| How much do we actually need to borrow? | The lowest closing balance plus a buffer |
| Can we keep all our staff? | Whether wages fit once arrears are handled |
| Is the business viable? | Whether cash in covers cash out once old debts are cleared |
The last question is the important one. Build a second version of the forecast where the pressing debts, including IRD arrears, overdue suppliers and expensive short-term loans, are paid out by one loan, with that loan’s repayment in their place. If that version stays positive, the business may have a funding problem rather than a viability problem.
Sharing it with IRD, creditors and lenders
- IRD. When you apply for an instalment arrangement on a larger or business debt, IRD may ask for a cash flow forecast; its IR591 form asks for similar information. A forecast you’ve already built makes that quick.
- Creditors. A simple summary showing when you can pay, and how much, makes a payment plan proposal much more credible. See how to talk to creditors.
- Lenders. For property-secured loans, no financials are needed for the initial assessment, but a realistic forecast strengthens the case that the loan will be repaid.
- Your accountant. Ask them to sense-check it. It’s a fraction of the cost of year-end accounts and far more useful in a crisis.
Keep it alive
A forecast is only useful if you update it. Every week:
- Replace the forecast figures for last week with actuals.
- Add a new week 13.
- Note what surprised you and why.
After a month, your forecasting will be much more accurate, and you’ll see problems weeks before they arrive.
If the forecast shows a gap
If the numbers show the business needs money to get through, and it’s viable once the old debts are dealt with, talk to us. Property-secured loans from $20,000 to $1m, or unsecured facilities based on turnover, can close the gap. Start an enquiry. A lending specialist will be glad to look at the forecast with you.