| name | design-cash-flow-forecast |
| description | Use when building a cash flow projection for a business — e.g., "will we run out of cash?", "how much runway do we have?", "13-week cash flow model", "cash flow forecast for fundraising" |
| source | Association for Financial Professionals (AFP) cash management guidelines; McKinsey "Cash is king" operations research; Sageworks/Pepperdine private capital market research; FP&A best practices (APQC) |
| tags | ["finance","corporate","cash-flow","forecasting","financial-planning","runway","treasury"] |
| related | ["apply-zero-based-budgeting"] |
| verified | true |
Design Cash Flow Forecast
Build a 13-week rolling cash flow forecast to predict cash position, identify shortfalls early, and inform financing decisions.
Why This Is Best Practice
Adopted by: The 13-week cash flow model is the standard for distressed company analysis (used by restructuring advisors Alvarez & Marsal, FTI Consulting) and for venture-backed startups tracking runway. CFOs at public companies maintain rolling 13-week models; boards require them in covenant-driven credit agreements.
CB Insights (2023) reports that 38% of startup failures cite "running out of cash" — nearly all of which is predictable 8–12 weeks in advance with a proper forecast. McKinsey research on corporate bankruptcies found that companies with a real-time cash forecast outsurvived liquidity crises at 3× the rate of those without one.
Income statement (P&L) lags reality — revenue is recognized before cash arrives, expenses are accrued before payment. Only a cash flow forecast shows when the bank account will be empty. 13 weeks is the standard horizon because it covers one quarter (enough for operational visibility) while remaining reliable (90-day projections have meaningfully more accuracy than annual).
