By Pieter Cronje, Head of Cash & Liquidity Management at TreasuryONE


To better manage their finance and treasury activities, many organisations generate a 13-week cash forecast to provide enough precision for immediate decision-making while still allowing for medium-term planning.


Why 13 weeks?

A 13-week forecast can help with both short and medium-term cash and liquidity management, and the range ensures that anticipated closing balances for the next quarter-end (a significant reporting date for many organisations) are constantly visible. Further, a 13-week forecast also covers topics that conventional planning and budgeting procedures miss, allowing businesses to avoid the short-term planning gap.


Planning and budgeting is generally prepared using monthly buckets, and thus a 13-week forecast provides four times the granularity, allowing for any short-term shortfalls to be identified with a detailed look-through.


In order to help organisations maximise the value of the 13-week cash forecast, there are some practical steps to be followed, and considerations to be made:


  1. What are the main objectives of the cash forecast?
  2. What are the key focus areas in the short and medium-term for cash and liquidity management?
  3. What are the needs and requirements of all stakeholders in the process?


Tips for success


  • Start simple: Start with a simple model. Unnecessary complexity will make the process overly difficult from the start and will decrease the likelihood of a successful launch.


  • Start fast: To improve the process and overall accuracy you will need data, but you will not get that data until after the first few forecast cycles. In this respect, retrospective analysis, rather than preemptive planning, is the key to achieving a highly accurate forecasting process.


  • Build in accuracy feedback: Forecast vs forecast and forecast vs actual analysis will provide critical insights into particular elements that decrease forecast accuracy, as well as identify trends in the data that are affecting accuracy.


  • Don’t over-automate from the start: Trying to over-automate can delay the start of the forecast, as well as prove costly to implement in certain circumstances. It is better to get going and do a cost-benefit analysis when identifying what parts of the forecast can be automated.


By always providing visibility over the next quarter’s forecasted closing balance, the 13-week forecast means that key reporting and management targets remain close at hand, contained within the most recent 13-week forecast figures.


The 13-week forecast also offers great assistance to treasury and finance teams with their day-to-day activities, such as managing working capital cycles or extracting the best value from deploying cash resources efficiently.