Cash flow is the #1 reason Australian small businesses fail — not lack of profit, but lack of cash at the right time. A business can be profitable on paper and still go under because it can't pay wages next Friday. A 13-week rolling cash flow forecast gives you visibility into exactly when money comes in and goes out.
1. Why 13 Weeks?
A 13-week forecast (one quarter) is the sweet spot between accuracy and usefulness. Beyond 13 weeks, assumptions become unreliable. Under 4 weeks, you can't see problems coming in time to act.
2. Building Your Forecast
Your forecast has three sections:
| Section | Include |
|---|---|
| Cash In | Customer payments (by expected date, not invoice date), loans, grants, GST refunds, asset sales |
| Cash Out | Wages, super, rent, supplier payments, loan repayments, BAS/tax payments, insurance, subscriptions |
| Net Position | Opening balance + cash in − cash out = closing balance (which becomes next week's opening balance) |
3. Common Cash Flow Killers
- Slow-paying customers — your invoice says "14 days" but they pay in 45. Forecast based on actual payment behaviour, not terms.
- BAS and tax bills — quarterly GST and PAYG liabilities create predictable cash drains. Schedule them.
- Seasonal dips — many Australian SMEs see a slump in January and July. Plan for it.
- Growth spending — hiring, marketing campaigns, and stock purchases consume cash before they generate revenue.
- Lumpy expenses — annual insurance, WorkCover premiums, and ASIC fees hit all at once.
4. Using Xero for Cash Flow Forecasting
Xero's "Short-term Cash Flow" projection (under Business → Short-term cash flow) uses your outstanding invoices, bills, and scheduled payments to project 30 days ahead. For a more robust 13-week forecast:
- Use Xero's "Budgets" feature to set monthly revenue and expense targets.
- Install the Float app (integrates with Xero) for visual, scenario-based forecasting.
- Export your aged receivables and payables weekly to build a manual forecast in a spreadsheet.
5. Actions When Cash Gets Tight
- Chase debtors immediately — send reminders on day 1 past due, call on day 7.
- Negotiate extended payment terms with suppliers — even 7 extra days can bridge a gap.
- Defer non-essential spending — that new laptop can wait 3 weeks.
- Draw on a business overdraft or line of credit — but only if you have one already set up.
- Talk to the ATO — if BAS is the crunch, set up a payment plan before the due date.
Key Takeaways
- A 13-week rolling forecast is the best tool for preventing cash crises.
- Forecast based on when cash actually arrives, not when invoices are issued.
- Schedule BAS, super, and annual payments into your forecast.
- Use Xero + Float for automated, visual cash flow projections.
- Act early when a shortfall is forecast — don't wait until the bank account is empty.