WRONG WAY

GOOD CASH FLOW ANALYSIS

While many have used 13 week cash flow analysis in the past, the vast majority do it inside accounting and use ratios rather than ask managers to commit to a near-term forecast of activities. Thus, most 13 week cash flow plans do not materialize in any meaningful way.

Senior executives take responsibility for each line in the 13 week cash flow, as per the exhibit. The actual is compared to the executive forecast in a short, positive weekly meeting where missing the forecast is not judged harshly but not trying is not tolerated. After a few weeks, the accuracy will be greatly improved and business controls will become very strong.