13 Week Cash Forecasting : Tips On How To Survive & Thrive During A Crisis

Video transcript: “Hey everybody, Brian here with CEO mastery I wanted to talk with you about 13 week cash forecasting so we are now in coronavirus craziness and we are concerned about cash cash is king it’s been said a million times and it is absolutely true so in times like this of uncertainty I hope you’re beginning with a lot of cash I hope you have a line of credit and that you can draw down and if so you may want to do that now just to be on the safe side so that you have it rather than finding out later for some reason you can’t get access to it and the other thing is to start forecasting predicting how long your cash is gonna last and what’s going to happen and so it’s a 13-week it’s a spreadsheet basically thirteen weeks because that’s that’s a quarter and that’s a long enough time frame that if you see some storms on the horizon after six seven twelve weeks you can start planning for it that’s kind of the whole point is to manage it not just live at Dave day-to-day and so you have your receivables up top the cash coming in you have all your expenses at the bottom below the more gory detail you can create the better honestly you know the devil is in the details if you don’t write all the details downs you’re gonna get surprised so it’s a bit laborious but I shouldn’t even say that I don’t want to put you off it’s a it’s a it’s it’s whatever you want to make it if you’re a detail person go for it I encourage it so you put all your collections across and I’m going like this across the column headings for each week and then and then the expenses now what happens is oh by the way and at the bottom is your net cash and so it’s positive its negative to the extent it’s negative and you’re running kind of a zero balance in your checking account then you draw into your line of credit up or down or into your savings or something like that now after each week passes instead of a prediction in the first week you put an actual in the column and then you forecasts another 13 weeks and then the next week you put the actuals down and forecast the next so at first to set this up it’ll take you several hours after a while it’ll take you maybe an hour to update because you kind of massaged the numbers as you get more information about them and of course the exercise is is get as much coming in as possible so don’t be afraid to ask your clients or customers for payment they may be and they may have plenty of cash they may be fine with it and they value you and they want to support you so they may be fine so just ask them just ask and and then on the payables on your expenses see if you can put them off as long as possible so that’s the game you play and the more detailed you play it the better you play it and also it gives you that you know if for some reason you’re gonna run out of cash in seven weeks then you know you better find a new pot of cash somewhere from investors lenders under your mattress whatever you’re gonna have to find some new cash but at least you have some time to work on it so by the way in crisis or disruption like we have now really important in normal dimes mmm maybe not as as necessary and helpful but certainly if you’re if in normal times your cash balances run low you probably want to do this and and then other times I’m not sure you have to decide for yourself but this is a great opportunity to learn how to do this to practice it to get good at it when you need to and then you can pull that tool out down the road when you need it another time so this is you know if you will it’s a silver lining this event this coronavirus event is causing us to do things like remote working get used to that how does that work cash forecasting and other things but I highly recommend you do that and if you want any help with that contact me or contact me for any questions you might have but that as well I’m happy to help you out so signing off from CEO mastery Brian Kinahan, all the best.