Weekly Cash Flow Forecast SOP

Purpose

Define the weekly cash flow forecast process owners + bookkeepers should run to stay ahead of cash. Profit is an opinion; cash is a fact. Most service-business owners watch revenue + ignore cash - until payroll comes up short or a tax bill arrives. A weekly forecast surfaces shortfalls 4-12 weeks before they happen, when you can still do something.

Scope

Applies to:

• Businesses with 2+ employees
• Any business that has experienced cash stress in past 12 months

Smaller businesses can use a simpler version (monthly cash check).

Responsibilities

• Owner / GM owns the forecast + makes decisions
• Bookkeeper / CFO prepares the data
• Office Manager flags issues in real-time (large bill incoming, customer slow-paying)

Cadence

• Weekly forecast: Monday morning, 60 minutes
• Daily cash review: 5-10 minutes, end of day
• Monthly reconciliation: align forecast to actual at month-end

Procedure

Prep (bookkeeper, 30-45 minutes Friday or weekend):

1. Pull current cash position from all bank accounts
2. Pull A/R aging (current, 30, 60, 90+)
3. Pull A/P aging (what's owed to suppliers, when)
4. Pull recurring weekly/monthly expenses (payroll, rent, utilities, software, insurance)
5. Update the forecast spreadsheet (template structure below)
6. Note any surprise items (large bill, unexpected revenue, customer issue)

Forecast template structure:

12-week horizon is standard. Beyond that gets speculative; less than that misses warning signals.

Review meeting (owner + bookkeeper, 60 minutes Monday):

Step 1: Current cash + recent activity (10 min)

• Cash position by account
• Last week's actual vs forecast: were we close? Variances > 10% need investigation
• Any surprise transactions?

Step 2: A/R review (15 min)

• Current A/R balance
• 30/60/90+ aging
• Top 5 outstanding by amount
• Customers 60+ days late: collection plan
• Customers 90+ days late: lawyer / write-off decision

Step 3: A/P review (10 min)

• Total A/P balance
• 30/60/90+ aging
• Any vendor disputes
• Cash discounts available (e.g., pay early for 2% discount)
• Critical payments due in next 14 days

Step 4: Forecast review (15 min)

• Week-by-week ending cash for next 12 weeks
• Identify any weeks below "safe" threshold (typically 30 days operating expenses)
• Identify any negative-cash weeks
• For each problem week: what action can we take NOW?

Step 5: Action plan (10 min)

For each cash-stress week identified:

• Speed up A/R: call late customers, offer payment plans
• Slow down A/P: negotiate payment terms with suppliers
• Defer non-essential: marketing spend, hiring, equipment purchases
• Increase line of credit: if available
• Owner contribution: short-term loan from owner
• Bank line of credit: more secure than personal credit cards

Pick 1-3 actions for this week. Document, assign, track to completion.

Step 6: Document + send (5 min)

• Save updated forecast
• Email summary to owner + bookkeeper
• Action items in a shared doc

Safe cash threshold

What's "enough" cash?

• Bare minimum: 30 days of operating expenses (payroll, rent, utilities, insurance)
• Healthy: 60 days
• Strong: 90+ days
• Excessive: 6+ months (cash is sitting; should invest in growth)

For a solidly seven-figure revenue business with annual expenses running most of that: 30 days of the safe-threshold buffer is a meaningful sum, 60 days roughly double that, and 90 days roughly triple - scale these ratios to your own annual expense run-rate to find your dollar target.

If cash dips below the safe threshold, you need to act - not panic, but act.

Acceptance criteria

• 12-week forward forecast updated weekly
• Variances vs prior week investigated
• A/R aging reviewed; collection actions taken
• A/P aging reviewed; large payments scheduled
• Cash-stress weeks identified + mitigation planned
• Forecast emailed to owner within 24 hours of meeting

Common pitfalls

Pitfall 1: Forecasting too optimistically

Revenue projections are typically inflated. Use a conservative case (75% of expected) for cash planning.

Pitfall 2: Ignoring A/R aging

Customers don't pay on time. 30-day A/R aging is normal; 60+ is problem; 90+ is loss likely.

Pitfall 3: Variable expenses surprises

Parts costs spike, repairs needed, sudden equipment failure. Build a buffer (5-10% of monthly expenses) for unpredictability.

Pitfall 4: Forgetting tax obligations

Quarterly estimated taxes, payroll taxes, sales tax - these aren't "real cash" available to you. Set aside ~25-30% of revenue in a separate account.

Pitfall 5: Missing seasonal patterns

Service businesses are seasonal. Forecast assumes recent run-rate; reality is busier or slower depending on time of year. Use 12-month rolling average.

Pitfall 6: Skipping meetings

The discipline of weekly review is what catches problems. Missing a week loses 1-3 weeks of warning.

Cash flow crisis signals

Cash projected negative within 30 days; two consecutive weeks below safe threshold; A/R or A/P aging dramatically worsening; customer cancellations rising; overdraft fees. Escalate: pull in CPA + attorney, talk to bank early (more helpful 30 days early than 5 days late), reduce overhead, factor receivables if needed, owner contribution.

Forecast accuracy

Track forecast vs actual weekly. Healthy: Week-1 ±5%, Week-4 ±15%, Week-12 ±25%. If 50%+ variance, investigate assumptions, one-time events, bookkeeping, formula.

Templates + tools

DIY spreadsheet (Excel/Sheets) works fine. Software when complexity rises: Float, Pulse (QuickBooks), Dryrun, Manuall in-app A/R + A/P reporting.

References

• Mike Michalowicz, "Profit First"
• AICPA cash management resources
• Manuall internal: Monthly Financial Review Process, Financial KPIs for a Service Business