Mini Episode: Why 13 Week Cash Planning is a Waste of Time
Episode Summary
In this mini episode of the Free to Grow CFO Podcast, Jon Blair challenges the dogma surrounding 13-week cash forecasts for DTC brands. While most fractional CFOs swear by them, Jon argues that they’re often unnecessary and waste valuable time. Instead, he shares a more efficient, decision-driven approach to cash forecasting that prioritizes practicality over tradition.
Whether you're leading a scaling DTC brand or managing finance ops, this episode will help you rethink how much cash flow visibility you really need—and when.
Key Takeaways:
Just because 13-week cash forecasts are common doesn’t mean they’re right for your business.
Weekly cash models should only be activated if monthly projections raise red flags.
Most brands only need 2–6 weeks of weekly visibility to make accounts payable decisions effectively.
Episode Links
Jon Blair - https://www.linkedin.com/in/jonathon-albert-blair/
Free to Grow CFO - https://freetogrowcfo.com/
Transcript
00:00 Rethinking the 13-Week Cash Forecast
04:03 Building Cash Forecasts for Decision-Making
Jon Blair (00:00)
Most fractional CFOs say a DTC brand should have a 13 week cash forecast. I think this is BS and today you're gonna find out why. Hey everyone, welcome to another mini episode of the Free to Grow CFO podcast where I break down one key concept that will help your DTC brand increase profit and cash flow as you scale. Okay, so do some brands need a 13 week cash forecast? Sure, but does that mean every brand needs a 13 week cash forecast? Not at all. And to be quite honest with you, I'm not even sure where this fabled 13 week cash model even got started and why it has become the gold standard. Look, instead of just following the status quo and what it feels like everybody else is doing, instead we should think critically and ask ourselves two key questions. Question number one is, do I actually need weekly visibility in the cash flows or is monthly enough?
You'd be surprised how often monthly visibility is enough for the decisions that you currently need to make within your business. At Free to Grow CFO, we only activate a weekly cash model when we see something in our monthly cash forecast model that indicates weekly visibility may be prudent. So think of it this way. This is our philosophy at Free to Grow CFO. We have monthly cash flow projections.
You can typically see in your monthly cashflow projections under different scenarios that there may be a risk that cash is gonna get tight at some month in the future. When we see that, we may activate a weekly cash model to dive deeper and get a more granular view on whether or not cash may go negative potentially on a weekly basis.
So, again. Question number one, do I actually need weekly visibility into cash flows or is monthly enough? At Free to Grow we start monthly and we activate weekly when there's a red flag that we see in our monthly cash flow projections. Question number two you should be asking is, what is the appropriate time horizon for the decisions that you need to make next several weeks? is where we're challenging the 13 week time horizon. Again, 13 weeks.
I know it's one fiscal quarter, although it still seems fairly arbitrary. Cause who's to say that one fiscal quarter or 13 weeks of visibility is appropriate for the decisions you need to make. The reason why I started challenging this and why we challenge this at Free to Grow CFO is cause I used to have a 13 week cashflow model at Guardian Bikes And you know what I found?
I rarely, if ever, I may be and quite frankly, as I'm thinking about it, I don't think I ever used beyond week six, maybe week eight. So that begs the question, why am I spending all this time painstakingly, forecasting cash flows all the way out to week 13? So in answering the second question, we really want to ask ourselves how far out into the future do we need to see to make quality decisions?
So for example, if you've decided that the decisions you need to use a cash forecast for are really centered around approving weekly AP payments. I oftentimes find that brands only need two to six weeks of visibility in order to make said decisions. Usually beyond six weeks and quite frankly, typically beyond four weeks, future AP is just gonna change so rapidly on a weekly basis that it's not really helpful to see that much further. So typically two to four or maybe two to six weeks of weekly cash visibility is plenty for approving AP payments. So what's the point that I'm making with all this? The point is you should build forecasts specifically to support making the decisions that are right ahead of you. No more and no less. Anything more than that is wasted time. And let's be real, time is not something that any of us can afford to waste right now.
So in summary, instead of just arbitrarily deciding that you need a 13 week cash forecast, start by asking yourself two key questions. One, do I actually need weekly visibility into cash flows or is monthly enough? And two, what is the appropriate time horizon? How far out in the future do I really need to see to make quality decisions? Answer those two questions, build what you support.
Report the answers to those two questions and don't build any more until the answers to those two questions change.
