Financial Management
Cash Flow Management and the 13-Week Cash Plan
Cash flow management means seeing and managing the timing of collections and payments in advance, so that the company can meet its obligations on time. Profitability shows whether a company is on the right economic path; cash shows whether it can keep walking it.
Why are profit and cash different?
Accounting works on an accrual basis: a sale is recorded as revenue when it is invoiced, whenever the cash arrives. Most of the gap sits in working capital:
- Trade receivables tie up cash (sold but not yet collected).
- Inventories tie up cash (paid for but not yet sold).
- Trade payables release cash (received but not yet paid for).
In a growing company, the sum of these three grows too. I show with worked figures how a hypothetical company with 40 per cent sales growth and an unchanged margin can still burn cash from operations in Why do profitable companies run out of cash?
What is a 13-week cash flow?
A 13-week cash flow is a short-term, direct-method cash projection that shows roughly the next quarter week by week. For each week it shows opening cash, expected collections, payments and closing cash.
Why 13 weeks?
- Weekly resolution reveals squeezes that a monthly budget hides: payroll, tax and loan payments usually cluster on particular days of the month.
- A one-quarter horizon is long enough to take financing decisions in time and short enough for the forecast to stay meaningful.
What does it contain?
| Section | Items | What to watch |
|---|---|---|
| Collections | Expected collections by customer | Use actual payment behaviour, not contractual terms |
| Payroll | Salaries and benefits | Which week of the month they are paid |
| Tax and social security | VAT, withholding, social security contributions, provisional tax | Filing periods and payment dates |
| Suppliers | Trade payables | Flag payments that can be renegotiated |
| Financing | Loan and leasing instalments, interest | Per contract schedule |
| Threshold | Minimum cash level | The floor at which the company can operate safely |
A worked example is in the 13-Week Cash Flow & Early Warning Model.
Cash early-warning indicators
In a cash model, looking only at the total balance is not enough. The indicators below signal trouble before it reaches the balance. I prepared this list as a framework for short-term cash reviews:
| Indicator | Signal |
|---|---|
| Collection realisation rate | If the share of expected weekly collections actually received falls, the assumptions are optimistic. |
| Days sales outstanding (DSO) | An increase ties up cash regardless of sales growth. |
| Customer concentration | If a few customers dominate collections, one delay affects the whole plan. |
| Weeks near the threshold | Weeks where closing cash approaches the minimum need a financing conversation in advance. |
| Payment clustering | Tax, payroll and loan payments falling in the same week. |
| Stress scenario gap | A widening gap between base and stress scenarios means the plan is fragile. |
Scenario analysis
A single-scenario cash plan hides risk. Running at least three scenarios is useful:
- Base: the most likely collection and payment behaviour,
- Stress: a delay of a few weeks from large customers,
- Worst: a fall in sales on top of the delay.
The aim is not to predict the future but to see in advance which week becomes critical under which conditions.
The tax calendar and cash
In Turkey, VAT arising on an invoice is declared and paid in the following period even if the amount has not yet been collected. For where tax payments sit in the cash plan, see tax from a CFO’s perspective.
Frequently asked questions
How often should a 13-week cash flow be updated?
Weekly. Each week the actual collections and payments are entered, a new week is added at the end, and the difference between forecast and actual is reviewed.
If there is a budget, is a cash plan still needed?
Yes. A budget is usually monthly and accrual-based; a cash plan is weekly and based on collections and payments. They answer different questions. For how they relate, see FP&A.
Sources
- Turkish VAT Law No. 3065 — Mevzuat Bilgi Sistemi (in Turkish)
- Turkish Revenue Administration (GİB) — current filing and payment calendar