{"course":{"slug":"ai-for-small-business","title":"AI for a Small Business","url":"https://addaly.com/learn/ai-for-small-business","level":"beginner","track":"work"},"lesson":{"slug":"cash-flow-on-one-page","title":"Thirteen weeks, and why profitable businesses run out of money","url":"https://addaly.com/learn/ai-for-small-business/cash-flow-on-one-page","position":50,"of":88,"minutes":9,"answer":"Profit is a period and cash is a moment, and the gap between them is timing, so a thirteen-week rolling forecast, updated for fifteen minutes every week with your own figures.","keyIdea":"Profit is a period and cash is a moment, and the gap between them is timing, so a thirteen-week rolling forecast, updated for fifteen minutes every week with your own figures, turns a future shortfall into a date you can act on."},"body":{"format":"markdown","text":"## Profit and cash are different things\n\nA business can be profitable and still fail to make payroll, and this catches people who are otherwise good at their trade.\n\nProfit is a statement about a period: revenue earned minus costs incurred. Cash is a statement about a moment: what is in the account today. They diverge because of **timing**. You buy materials in March, do the work in April, invoice at the end of April on 30-day terms, and get paid in June. Three months of outflow before the inflow, on a job that is profitable.\n\nGrowth makes this worse, which is the part that surprises people. More work means more materials bought before more invoices are paid. The businesses that run out of cash are frequently the ones doing well.\n\n## The instrument\n\nA thirteen-week rolling cash forecast. One page, one column per week, three blocks.\n\n- **Opening balance.** What is actually in the account.\n- **In.** Invoices due, by the week you expect them rather than the week they are due. Add expected new sales.\n- **Out.** Wages, rent, suppliers, tax, loan repayments, subscriptions, the quarterly bill you always forget.\n- **Closing balance**, which becomes next week's opening.\n\nThirteen weeks because it is far enough to see a problem while you can still act (chase early, delay an order, arrange a facility, talk to the tax authority before rather than after) and near enough to be estimable.\n\nThe row that matters is the closing balance. Any week where it goes negative is a date you now know about in advance, and knowing it in advance is the entire value.\n\n> Figure: Thirteen weeks, and the week that decides the quarter. Line chart of closing balance, thousands against weeks ahead: As forecast (1, 18) (3, 15) (5, 12) (7, 9) (9, 6) (11, 13) (13, 21); If the two largest receipts are a month late (1, 18) (3, 13) (5, 8) (7, 4) (9, 0) (11, 5) (13, 14). Profit is a period and cash is a moment. The lower line reaches zero in week nine, which is a date seven weeks away, and seven weeks is long enough to chase two invoices, delay an order or ask about an instalment arrangement.\n\n## Where AI helps, and where it must not\n\n**Helps: building the structure.** *Give me the layout and the formulas for a thirteen-week rolling cash forecast in Google Sheets, with opening balance, receipts, payments and closing balance. Explain each formula.* Twenty minutes instead of an afternoon.\n\n**Helps: listing what you forgot.** *Here are my payment categories. What does a small [trade] business typically pay that is missing from this list?* Insurance renewals, annual licences, tax instalments, the accountant's fee. The forgotten items are what break a forecast.\n\n**Helps: reading it.** Paste the numbers and ask which week is tight and what the largest lever is. It will usually name the obvious thing, and the obvious thing is usually right.\n\n**Must not: the numbers.** Every figure is yours, from your bank, your invoices, your contracts. A forecast with an estimated figure in it is a forecast about a business that does not exist.\n\n**Must not: the arithmetic.** Formulas in the sheet, tested on three rows.\n\n## The habit\n\nFifteen minutes, same time every week. Update the opening balance from the bank, move anything that did not happen, add what is new.\n\nDoing it weekly matters more than doing it precisely. A rough forecast updated every Monday is a working instrument; a careful one built in January and never touched is a document.\n\n## The two questions it answers\n\n**Can I afford this?** A new machine, a hire, a van. Put it in the relevant week and look at the closing balance line. This converts an anxious feeling into a visible answer.\n\n**Which invoice do I chase first?** Not the oldest, and not the largest. The one whose arrival changes a negative week. That is a different list from the one you would have chased on instinct, and it is the whole reason to have the forecast in front of you when you write the chasers.\n\n## If you do only one thing\n\nList every payment leaving your account in the next four weeks, with dates, and compare the total against your balance plus confirmed receipts.\n\nHalf of small businesses have never written that down. It takes thirty minutes, needs no software beyond a sheet of paper, and it is the single most useful thing in this module.\n\n## Estimating the uncertain rows\n\nTwo rows are always guesses: new sales, and when customers will actually pay. Guess them in a way that helps.\n\n**Pay from history, not from terms.** If your customers pay on average 47 days against 30-day terms, forecast 47. Your accounting software can tell you the real figure in a minute, and using the terms instead is the single most common reason a forecast is optimistic.\n\n**Forecast new sales low.** Not out of pessimism, but because the cost of being wrong is asymmetric. Overestimating cash you do not have leads to commitments you cannot meet; underestimating leaves you pleasantly surprised.\n\n**Show the bad case as its own line.** One extra row at the bottom: closing balance if the two largest receipts arrive a month late. If that line stays positive, you can stop worrying about it. If it does not, you know precisely which two invoices decide your quarter.\n\n## Tell the truth early\n\nIf a week is going to be short, the useful actions are all things that need notice: talking to the supplier about terms, asking the tax authority about an instalment arrangement, chasing the two invoices that matter, delaying an order.\n\nAll of them work far better three weeks ahead than three days. The forecast is worth having only because it buys that notice."},"check":{"question":"A workshop is profitable on every job and keeps running short of cash. Which explanation fits the pattern best?","options":[{"text":"Overheads are being under-allocated to jobs, so the jobs are less profitable than the costings suggest.","correct":false,"tempting":"Would mean the business is not actually profitable, which contradicts the premise and describes a costing error rather than a timing one."},{"text":"Materials are paid for weeks before the resulting invoices are collected, so growing volume increases the gap between outflow and inflow.","correct":true},{"text":"The business is not charging enough, and a price increase would resolve the shortfall by improving the margin on each job completed.","correct":false,"tempting":"Prescribes a margin fix for a timing problem; a higher price collected sixty days later still leaves the same weeks short of cash."},{"text":"Customers are paying late, so the business should tighten its credit control and enforce its payment terms more firmly with the accounts that consistently exceed them.","correct":false,"tempting":"Names a real aggravating factor worth acting on, but the gap exists even when every customer pays exactly on the agreed terms."}]},"prev":{"slug":"spreadsheets-without-fear","title":"Ask for the formula, never for the total","url":"https://addaly.com/learn/ai-for-small-business/spreadsheets-without-fear"},"next":{"slug":"stock-and-suppliers","title":"Reorder points, and comparing quotes that are not comparable","url":"https://addaly.com/learn/ai-for-small-business/stock-and-suppliers"},"authorship":"Founder and series editor: Dr Mustafa Mun. Written by AI models to a written standard. Exam keys checked blind by a second model: 3,665 of 3,666 agreed. Academic review invited.","review":{"status":"Draft, open for academic review"},"cite":"Addaly (2026) 'Thirteen weeks, and why profitable businesses run out of money', in AI for a Small Business. Edited by M. Mun. Addaly. Available at: https://addaly.com/learn/ai-for-small-business/cash-flow-on-one-page (Accessed: 13 October 2026).","licence":{"name":"CC BY-NC-SA 4.0","url":"https://creativecommons.org/licenses/by-nc-sa/4.0/"},"reader":{"schema":1,"title":"Thirteen weeks, and why profitable businesses run out of money","courseTitle":"AI for a Small Business","module":{"index":6,"slug":"money-and-the-back-office","title":"Money, paperwork and the back office"},"answer":null,"keyIdea":"Profit is a period and cash is a moment, and the gap between them is timing, so a thirteen-week rolling forecast, updated for fifteen minutes every week with your own figures, turns a future shortfall into a date you can act on.","hero":{"kind":"figure","figure":{"t":"figure","label":"Figure","figure":{"type":"line","title":"Thirteen weeks, and the week that decides the quarter","series":[{"label":"As forecast","points":[[1,18],[3,15],[5,12],[7,9],[9,6],[11,13],[13,21]]},{"label":"If the two largest receipts are a month late","points":[[1,18],[3,13],[5,8],[7,4],[9,0],[11,5],[13,14]]}],"xLabel":"weeks ahead","yLabel":"closing balance, thousands","caption":"Profit is a period and cash is a moment. The lower line reaches zero in week nine, which is a date seven weeks away, and seven weeks is long enough to chase two invoices, delay an order or ask about an instalment arrangement."},"alt":"Figure: Thirteen weeks, and the week that decides the quarter. Line chart of closing balance, thousands against weeks ahead: As forecast (1, 18) (3, 15) (5, 12) (7, 9) (9, 6) (11, 13) (13, 21); If the two largest receipts are a month late (1, 18) (3, 13) (5, 8) (7, 4) (9, 0) (11, 5) (13, 14). Profit is a period and cash is a moment. The lower line reaches zero in week nine, which is a date seven weeks away, and seven weeks is long enough to chase two invoices, delay an order or ask about an instalment arrangement."}},"blocks":[{"t":"h2","id":"profit-and-cash-are-different-things","runs":[{"text":"Profit and cash are different things"}]},{"t":"p","runs":[{"text":"A business can be profitable and still fail to make payroll, and this catches people who are otherwise good at their trade."}]},{"t":"p","runs":[{"text":"Profit is a statement about a period: revenue earned minus costs incurred. Cash is a statement about a moment: what is in the account today. They diverge because of "},{"text":"timing","b":true},{"text":". You buy materials in March, do the work in April, invoice at the end of April on 30-day terms, and get paid in June. Three months of outflow before the inflow, on a job that is profitable."}]},{"t":"p","runs":[{"text":"Growth makes this worse, which is the part that surprises people. More work means more materials bought before more invoices are paid. The businesses that run out of cash are frequently the ones doing well."}]},{"t":"h2","id":"the-instrument","runs":[{"text":"The instrument"}]},{"t":"p","runs":[{"text":"A thirteen-week rolling cash forecast. One page, one column per week, three blocks."}]},{"t":"ul","items":[[{"text":"Opening balance.","b":true},{"text":" What is actually in the account."}],[{"text":"In.","b":true},{"text":" Invoices due, by the week you expect them rather than the week they are due. Add expected new sales."}],[{"text":"Out.","b":true},{"text":" Wages, rent, suppliers, tax, loan repayments, subscriptions, the quarterly bill you always forget."}],[{"text":"Closing balance","b":true},{"text":", which becomes next week’s opening."}]]},{"t":"p","runs":[{"text":"Thirteen weeks because it is far enough to see a problem while you can still act (chase early, delay an order, arrange a facility, talk to the tax authority before rather than after) and near enough to be estimable."}]},{"t":"p","runs":[{"text":"The row that matters is the closing balance. Any week where it goes negative is a date you now know about in advance, and knowing it in advance is the entire value."}]},{"t":"h2","id":"where-ai-helps-and-where-it-must-not","runs":[{"text":"Where AI helps, and where it must not"}]},{"t":"p","runs":[{"text":"Helps: building the structure.","b":true},{"text":" "},{"text":"Give me the layout and the formulas for a thirteen-week rolling cash forecast in Google Sheets, with opening balance, receipts, payments and closing balance. Explain each formula.","i":true},{"text":" Twenty minutes instead of an afternoon."}]},{"t":"p","runs":[{"text":"Helps: listing what you forgot.","b":true},{"text":" "},{"text":"Here are my payment categories. What does a small [trade] business typically pay that is missing from this list?","i":true},{"text":" Insurance renewals, annual licences, tax instalments, the accountant’s fee. The forgotten items are what break a forecast."}]},{"t":"p","runs":[{"text":"Helps: reading it.","b":true},{"text":" Paste the numbers and ask which week is tight and what the largest lever is. It will usually name the obvious thing, and the obvious thing is usually right."}]},{"t":"p","runs":[{"text":"Must not: the numbers.","b":true},{"text":" Every figure is yours, from your bank, your invoices, your contracts. A forecast with an estimated figure in it is a forecast about a business that does not exist."}]},{"t":"p","runs":[{"text":"Must not: the arithmetic.","b":true},{"text":" Formulas in the sheet, tested on three rows."}]},{"t":"h2","id":"the-habit","runs":[{"text":"The habit"}]},{"t":"p","runs":[{"text":"Fifteen minutes, same time every week. Update the opening balance from the bank, move anything that did not happen, add what is new."}]},{"t":"p","runs":[{"text":"Doing it weekly matters more than doing it precisely. A rough forecast updated every Monday is a working instrument; a careful one built in January and never touched is a document."}]},{"t":"h2","id":"the-two-questions-it-answers","runs":[{"text":"The two questions it answers"}]},{"t":"p","runs":[{"text":"Can I afford this?","b":true},{"text":" A new machine, a hire, a van. Put it in the relevant week and look at the closing balance line. This converts an anxious feeling into a visible answer."}]},{"t":"p","runs":[{"text":"Which invoice do I chase first?","b":true},{"text":" Not the oldest, and not the largest. The one whose arrival changes a negative week. That is a different list from the one you would have chased on instinct, and it is the whole reason to have the forecast in front of you when you write the chasers."}]},{"t":"h2","id":"if-you-do-only-one-thing","runs":[{"text":"If you do only one thing"}]},{"t":"p","runs":[{"text":"List every payment leaving your account in the next four weeks, with dates, and compare the total against your balance plus confirmed receipts."}]},{"t":"p","runs":[{"text":"Half of small businesses have never written that down. It takes thirty minutes, needs no software beyond a sheet of paper, and it is the single most useful thing in this module."}]},{"t":"h2","id":"estimating-the-uncertain-rows","runs":[{"text":"Estimating the uncertain rows"}]},{"t":"p","runs":[{"text":"Two rows are always guesses: new sales, and when customers will actually pay. Guess them in a way that helps."}]},{"t":"p","runs":[{"text":"Pay from history, not from terms.","b":true},{"text":" If your customers pay on average 47 days against 30-day terms, forecast 47. Your accounting software can tell you the real figure in a minute, and using the terms instead is the single most common reason a forecast is optimistic."}]},{"t":"p","runs":[{"text":"Forecast new sales low.","b":true},{"text":" Not out of pessimism, but because the cost of being wrong is asymmetric. Overestimating cash you do not have leads to commitments you cannot meet; underestimating leaves you pleasantly surprised."}]},{"t":"p","runs":[{"text":"Show the bad case as its own line.","b":true},{"text":" One extra row at the bottom: closing balance if the two largest receipts arrive a month late. If that line stays positive, you can stop worrying about it. If it does not, you know precisely which two invoices decide your quarter."}]},{"t":"h2","id":"tell-the-truth-early","runs":[{"text":"Tell the truth early"}]},{"t":"p","runs":[{"text":"If a week is going to be short, the useful actions are all things that need notice: talking to the supplier about terms, asking the tax authority about an instalment arrangement, chasing the two invoices that matter, delaying an order."}]},{"t":"p","runs":[{"text":"All of them work far better three weeks ahead than three days. The forecast is worth having only because it buys that notice."}]}],"check":{"question":[{"text":"A workshop is profitable on every job and keeps running short of cash. 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