Importance of Building Weekly Cash Flow Forecasts for the Businesses

Importance of Building Weekly Cash Flow Forecasts for the Businesses

What are weekly cash flow forecasts?

Weekly cash forecasts are used to project a company’s liquidity over the medium term, estimating the timing and amounts of cash inflows and outflows.

Companies big and small, early and mature, should utilize this tool. The weekly cash flow forecast can even be tailored to businesses in all industries and with varying business models.

Breaking the business cash flow down on a weekly basis helps to avoid the situation of overlooking if using a month, quarterly, or yearly interval.

Cash is King Mentality

As the recessionary headwinds are blowing in the financial market, keeping cash with the business should be top most importance for the businesses

Working Capital Management

Businesses should look for their working capital movement by identifying the customers who are slower in making payments and buying more time from suppliers to keep the cash position healthy.

More bargaining Power

If the business keeps healthy cash, it leads the business to more comfortable positions to strike the best negotiations in case to raise the appropriate financing for expansion.

Business Partnering

Finance teams should be more vigilant to coordinate cross functional departments to keep understand the cash flow requirements and plan accordingly

Steps of Building Weekly Cash Flow

Step 1: Set up the spreadsheet. Add week-ending dates across the top, and down the left-hand column, create rows for cash receipts and disbursements. Fill in 3-4 weeks of actual data to draw a trend, and then project from there.

Step 2: Understand the cash inflows cycle that how sales are being made and cash is collected.

Step 3: Focus on cash payments, identify the critical and non-critical payments (payments which can be delayed for some time)

Step 4: Lastly, subtract disbursements from cash receipts for net cash flow. If there is a deficit in the week end cash balance, either draw on the running finance credit facility or figure out how to increase receipts from customers or decrease disbursements to suppliers.

Benefits of Weekly Cash Flows

Enhances understanding of Working Capital Cycle

Reduces cost of Capital by minimizing bank borrowings

Effective business Partnering with cross functional departments

Proactive approach to avoid any dire business situation



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