Why a 13-week forecast is useful
A profitable company can face a cash shortage when collections lag behind payments. A rolling forecast models expected bank receipts and disbursements for the next 13 weeks, or 91 days. It approximates a quarter; it need not match a calendar or statutory quarter. Keep a daily view in weeks with tight headroom or closely spaced maturities.
This is a treasury model, distinct from a historical cash flow statement. Under AS 3 or Ind AS 7, where applicable, operating cash flows can be presented by the direct or indirect method. The forecast uses a receipts and payments schedule because it must show when money is expected to clear, regardless of the statutory presentation method.
Build the model in five steps
- Start with cleared, available balances. Reconcile opening cash and bank balances. List restricted deposits or project cash separately. Track undrawn committed facilities and verified drawing power as a separate headroom line, not as cash.
- Forecast receipts invoice by invoice where material. Use promised dates, customer history, disputes, milestones and bank cut-offs. If a customer typically pays 68 days after an invoice issued at the start of Week 1, place the receipt in Week 10, not in the contractual 30-day window. Include customer advances, cash sales and expected export incentive receipts only when supported.
- Schedule payment obligations by actual due date. Track payroll, provident fund, ESI, professional tax, GST, TDS and advance tax using the rules for the relevant entity, period, state, scheme and any notified extension. Do not use one date for all GST or TDS filings and remittances. Identify critical utilities and contractual supplier payments. Any proposed deferral must respect the underlying due date and obtain agreement where required.
- Include investing and financing cash movements. Schedule capex, loan draws, principal, interest, leases and LC maturities. A financing draw increases cash only when received and reduces undrawn capacity. Transfers between available operating accounts do not create group cash. Do not count invoice proceeds once from a financier and again from the customer.
- Test available cash and headroom separately. Closing cash equals opening cash plus actual or forecast inflows minus outflows, including scheduled funding movements. Show a negative pre-funding result as a financing gap. Use an internal minimum liquidity buffer based on payroll, essential overheads and volatility; a two- to four-week buffer is an illustrative policy, not a universal requirement.
Weekly cash template
Amounts are in ₹ lakh. Outflows are shown as positive figures and are subtracted. Weeks 4–11 are omitted only for display. Assume no additional financing movements in the weeks shown.
| Line item | Week 1 | Week 2 | Week 3 | Week 12 | Week 13 |
|---|---|---|---|---|---|
| Opening available cash | 45.00 | 32.50 | 28.00 | 55.00 | 52.00 |
| Collections | 25.00 | 40.00 | 35.00 | 50.00 | 45.00 |
| Advances and other receipts | 5.00 | 2.00 | 8.00 | 4.00 | 5.00 |
| Total inflows | 30.00 | 42.00 | 43.00 | 54.00 | 50.00 |
| Payroll | 22.00 | 0 | 0 | 22.00 | 0 |
| PF, ESI and TDS | 0 | 6.50 | 0 | 6.50 | 0 |
| GST | 0 | 0 | 14.00 | 0 | 15.00 |
| Micro and small suppliers | 8.50 | 12.00 | 9.00 | 10.00 | 8.00 |
| Critical overheads | 4.00 | 2.00 | 3.50 | 4.00 | 2.50 |
| General trade vendors | 5.00 | 18.00 | 12.00 | 12.00 | 14.00 |
| Loan instalments and interest | 3.00 | 8.00 | 2.50 | 2.50 | 4.00 |
| Total outflows | 42.50 | 46.50 | 41.00 | 57.00 | 43.50 |
| Net movement | −12.50 | −4.50 | 2.00 | −3.00 | 6.50 |
| Closing available cash | 32.50 | 28.00 | 30.00 | 52.00 | 58.50 |
Seven worked cases
1. Identify a funding gap before an LC matures
Dynatech has ₹40 lakh cash and ₹35 lakh undrawn cash credit in Week 1, a combined liquidity cushion of ₹75 lakh if the facility is drawable. Assume Week 7 starts with ₹30 lakh of available cash. Advance tax, GST and a usance LC maturity of ₹35 lakh, ₹28 lakh and ₹42 lakh total ₹105 lakh. Expected collections of ₹30 lakh give a ₹75 lakh net outflow and a ₹45 lakh pre-funding shortfall after opening cash. The company brings in ₹49 lakh net from discounting ₹50 lakh face value of eligible invoices, collects another ₹9 lakh net of any prompt payment discount, and defers ₹5 lakh of discretionary tooling. On these assumptions the closing cushion is ₹18 lakh, before any new credit draw. Verify eligibility, financier fees, settlement timing and the effect on later collections.
2. Plan micro and small supplier payment waves
Precision Forgings has 14 suppliers whose invoices need individual due dates. Weeks 3 and 8 have ₹42 lakh and ₹38 lakh of scheduled maturities, or ₹80 lakh together. The MSMED Act requires payment by the written agreed date, which cannot exceed 45 days from acceptance or deemed acceptance, or before the appointed day if there is no written agreement. Verify whether a timely written objection affects acceptance. Section 43B(h) of the 1961 Act applies for the relevant earlier periods; Section 37 of the 2025 Act contains the corresponding rule for tax years governed by it. A late amount otherwise deductible is generally deductible on actual payment, with no ordinary return-due-date saving for this category. Plan against the individual due dates, not a blanket 45-day queue.
3. Explain a missed collection
A Week 4 forecast of ₹65 lakh produces ₹38 lakh in the bank. The variance is ₹27 lakh adverse, or 41.5% of forecast. A quality dispute accounts for ₹25 lakh, leaving ₹2 lakh to investigate separately. If the customer subsequently agrees to pay the disputed ₹25 lakh in Week 6, move it to that week and update the downside scenario.
4. Model borrowing availability using drawing power
An electronics company has a ₹3 crore cash credit limit, ₹2.60 crore outstanding and assumed drawing power of ₹2.80 crore. Nominal headroom is ₹40 lakh, but drawable headroom is ₹20 lakh. A ₹30 lakh additional draw would exceed drawing power by ₹10 lakh. If the bank confirms that the eligible stock and creditor changes increase drawing power by ₹22 lakh, effective capacity becomes ₹3 crore, capped by the sanction. At an unchanged outstanding balance, the ₹30 lakh draw then leaves ₹10 lakh available. Separately forecast the cash used to pay suppliers; if it increases borrowing, the outcome changes. A payment does not automatically increase drawing power by its face value.
5. Reforecast a delayed export receipt
At an assumed ₹83 per US dollar, USD 400,000 equals ₹3.32 crore. A receipt originally due at the start of Week 3 that moves 30 days later falls in Week 7; exact timing depends on the original day and bank clearance. If goods have already shipped, discuss post-shipment credit against eligible export bills with the bank. Packing credit is pre-shipment finance and is not the substitute for an existing shipped receivable. Check any currency exposure and available facilities before including proceeds.
6. Match a dividend to an advance tax payment
A holding company expects ₹18 lakh of advance tax and a ₹25 lakh gross interim dividend. Assume the bank credits ₹22.50 lakh on 11 June after ₹2.50 lakh illustrative withholding. A payment of ₹18 lakh on 14 June leaves ₹4.50 lakh cash from that receipt. Verify the applicable withholding and whether the subsidiary can pay before the tax deadline. Include a fallback if the dividend is delayed or not approved.
7. Reconcile ERP data to the weekly cash view
A distributor with 1,200 customers and 400 suppliers loads invoice-level due dates, reconciles bank balances and maintains documented manual overrides for disputes and timing. If its collection forecast error falls from 28% to 4% using the same measurement definition and a comparable period, the change is 24 percentage points. That is an illustrative outcome, not a software guarantee. Reconcile forecast inputs with the accounting records, but keep the management forecast distinct from statutory Schedule III financial statements.
Keep the forecast rolling
Freeze the forecast version before replacing a week with actuals. Reconcile bank movements, explain timing and permanent variances separately, and assign each material variance an owner. Move the next 12 weeks forward and add a new Week 13. Maintain base and downside scenarios and check what cash remains if expected collections or financing do not arrive. If a week goes below the buffer, decide which collections can realistically be advanced, which spending can lawfully be moved, and what committed financing is available. Record changes to assumptions and cash dates so the next review can distinguish model error from changes in the business.
Sources
- MCA: Ind AS 7, Statement of Cash Flows, paragraphs 6–9 and 18–20
- Companies (Accounting Standards) Rules, 2021, including AS 3
- India Code: MSMED Act, 2006, sections 2 and 15–17
- CBDT Circular 1/2024: explanation of Section 43B(h)
- Income-tax Act, 2025, Section 37: deduction on actual payment
- RBI: export credit guidance, pre-shipment and post-shipment credit distinction