Cash and finance
The first dimension of the Sentinel Mandate. Ninety days of visibility on your cash position, and a plain account of where the money is leaking.
What is a 13-week cash flow forecast?
A 13-week cash flow forecast is a rolling week-by-week projection of every dollar entering and leaving a business over the next quarter. It is built from expected client collections and scheduled payments rather than accounting accruals, and updated every week, so it shows the cash expected to be in the account on a given Friday.
It is the standard instrument in restructuring work because it answers the only question that matters when cash is tight: on which specific week do we run out, and what has to change before then. A monthly profit and loss statement cannot answer that. It reports a period that has already closed, in accrual terms, and it averages away the weeks where payroll and a supplier run land together.
Why thirteen weeks
Thirteen weeks is one quarter. It is long enough to contain a full cycle of receivables, payroll runs, remittances and seasonal swings, and short enough that each week can be projected from expected collections and known payments rather than from an annual plan.
Beyond a quarter the numbers become a budget: useful for planning, useless for deciding whether to make Thursday's payment. Inside the quarter, the forecast is a projection of what is expected, based on the information available that week, and updated every week.
What a cash flow projection shows that a P&L does not
A profitable business can run out of cash, and frequently does. Profit is recorded when an invoice is raised; cash arrives when it is paid. A cash flow projection makes that gap visible week by week, which is where the risk lives.
The common pattern in a mid-market business under pressure is growing revenue, healthy margin on paper, and a widening receivables position quietly funded by suppliers. Nothing in the monthly statement flags it until a payment is missed.
Margin structure, and the three levers
Margin is rarely uniform. Broken down by product, service or client, most businesses find that a minority of the work carries the profit and some of it is being delivered at a loss.
Once that is visible, three levers usually move cash faster than anything else: the terms you collect on, the terms you pay on, and the volume you decide to stop carrying. Which of the three matters most is a fact about your business, not a general rule.
The twenty percent stress test
The forecast is then run against a twenty percent revenue shock to establish how long the business holds and what breaks first. The point is to know the answer before the shock rather than during it.
What this dimension covers
- A rolling 13-week cash flow forecast, built from expected client collections and scheduled payments
- Margin structure by product, service or client
- The three principal levers of your cash flow, ranked by effect
- A stress test against a twenty percent revenue shock
FAQ
How is a 13-week cash flow forecast different from a budget?
A budget is a plan for a year, built from targets. A 13-week forecast is a projection of one quarter, built from expected client collections and the payments already scheduled. The budget tells you what you intend; the forecast projects what is expected to happen to the bank account, and is updated every week.
Do I need clean books before this is useful?
No. The forecast is built from receipts and payments rather than the general ledger, so it can be assembled while the accounting is still being tidied. In practice the exercise usually surfaces the bookkeeping problems worth fixing.
Who maintains the forecast afterwards?
Your team does. The mandate leaves the model and the routine behind, because a forecast that only works while an adviser is in the building has not solved anything.
Is this the same as hiring a fractional CFO?
No. A fractional CFO manages the finance function on an ongoing basis. This is a diagnostic that establishes what the finance function needs to do. Owners often run the diagnostic first, precisely to know what they are hiring for.
Cash is usually the first dimension we look at
It is the one that sets the timetable for everything else. If the cash position is unclear, that is the place to start.