Your profit and loss account tells you whether last month worked. It does not tell you whether you can fund next quarter. For most businesses, the gap between those two questions is where the genuine risk sits.
Why the P&L is the wrong instrument
A P&L is an accrual document. It recognises revenue when it is earned and cost when it is incurred — which is exactly right for measuring performance, and exactly wrong for answering “will there be money in the account on the 28th?”. A profitable business with 90-day receivables and 30-day payables can run out of cash without a single bad month appearing in its accounts.
The annual budget does not help either. By the time a variance shows up in a monthly report, the decision window that mattered has usually closed. What leadership teams need is a short, rolling, deliberately imprecise view of actual money moving in and out.
“Thirteen weeks is long enough to see a problem coming, and short enough that you can still do something about it.”
What actually goes in the model
One column per week, thirteen columns, four blocks. Nothing more. The discipline is in what you leave out.
- 1Opening cash — the real bank position, reconciled, not the ledger balance.
- 2Receipts — by customer for the top twenty, one line for the rest, timed to expected payment date rather than invoice date.
- 3Disbursements — payroll, suppliers, rent, loan service, VAT and tax payments, capital commitments.
- 4Closing cash and headroom — the closing position against your facility limit and any covenant floor.
What changes once you have it
Three things, quickly. Collections stop being an accounts-receivable task and become a weekly leadership conversation, because the model makes the cost of a slipped payment visible. Capital decisions get timed rather than deferred — you can see which week has the room. And the conversation with your bank changes character entirely, because you arrive with a forecast instead of a request.
Accuracy matters less than rhythm. A model that is roughly right and updated every Monday beats a precise one that is rebuilt quarterly. Re-forecast weekly, roll the window forward, and compare last week’s forecast to what actually happened — that variance is where the learning is.
Not sure where your cash visibility stands?
The Finance Health Check assesses cash and working capital alongside five other dimensions of your finance function.
20+ years across finance leadership, asset management and transformation — most recently leading finance for Dubai Holding’s marina portfolio.
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