Cash flow management — enough warning to do something about it
Profitable businesses run out of cash regularly, and almost always for reasons that were visible weeks earlier. The value of a cash forecast is not accuracy. It is the lead time.
EverStone CPA is a sole practitioner Chartered Professional Accountant firm working remotely with owner-managed businesses across BC.
Quick answer: Cash flow management means a rolling thirteen-week forecast of money in and money out, a working-capital view of receivables, payables and inventory, and a standing view of the obligations that arrive on a calendar rather than with the work: tax instalments, sales tax, payroll remittances and loan payments.
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Why profit and cash come apart
The profit and loss records revenue when earned and costs when incurred; the bank records money when it moves. Between them sit receivables, payables, inventory, work in progress, capital purchases, loan principal and tax, each a place where a profitable month turns tight.
The usual pattern is growth. A fast-growing business funds itself: more work means materials and wages paid before invoices are collected. Profit improves monthly while the bank balance falls. Nothing is wrong, and it can still sink a business.
The thirteen-week forecast
Thirteen weeks is the standard horizon because it is long enough to act on and short enough to be accurate. A twelve-month cash projection is a planning document; a thirteen-week forecast is an operating one.
It is built from what is known, not the budget: existing receivables and when they will realistically pay, payables and due dates, payroll and remittance dates, instalments, rent, loan payments and committed capital spend.
Its value is the shape rather than the total. Knowing that week nine is tight is what lets you move a purchase, chase two invoices, or draw on a facility deliberately instead of discovering it at the bank.
The obligations that arrive on a calendar
Some of the largest payments have nothing to do with the month’s results. Corporate tax instalments, sales tax remittances, payroll source deductions and loan principal arrive on dates set elsewhere, and each commonly causes cash surprises.
A controller keeps these on the forecast permanently. Instalments catch businesses out because they are based on a prior year: after a strong year, payments continue at that level into a weaker one unless the estimate is revised.
Where the sales tax collected has been spent, that is a specific and recoverable problem, and it is far better addressed with a forecast in hand than after a demand arrives.
Working capital is the other half
A forecast tells you what is coming. Working capital is what you can change.
Receivables. Not the total, the concentration and the ageing. Terms that are enforced, follow-up that happens on a schedule, and a decision about when to stop extending credit. Payables. Paying on terms rather than early, without damaging the supplier relationships that let you operate at all. Inventory and work in progress. Cash sitting still. In many businesses this is the largest single lever and the least examined one.Where this fits
Cash management is one of the deliverables inside a fractional controller engagement, alongside management reporting and budgeting and forecasting. The three work together: the close makes the numbers real, the budget says what was expected, and the cash forecast says what happens next.
When a lender is the one asking for the numbers, financing and lender readiness covers what they expect to see and the form they expect it in.
Other fractional cfo or controller work
The rest of what this covers, and the page each one is on.
Common questions about cash flow management
We are profitable. Why would we need this?+
How accurate is a thirteen-week forecast?+
Who maintains it?+
Can this help with a lender conversation?+
Starting fees
Every fee is fixed in writing before any work begins.
- Controller or CFO supportcontroller from $1,650, CFO from $2,750 a monthThis page
- Monthly bookkeeping, GST/PST filing includedfrom $325 a month
- Payroll, remittances, T4s and ROEsincluded in monthly bookkeeping
- Books, payroll and the year-end T2 together$500–$700 a month
- Corporate year-end and T2 returnfixed fee, quoted in writing
- Personal tax return (T1)from $125; self-employed or rental $275–$500
- Catch-up bookkeepingfrom $2,200 per year of records
- One-off advice call with a CPA$225 plus GST