The profit-and-loss statement and the bank balance can tell two completely different stories at the same time. Profitable on paper, overdrawn in reality. This isn't a bookkeeping mistake. It's the gap between when you earn revenue and when the cash actually shows up. A gap that's harmless for steady businesses and lethal for seasonal ones, where four good months have to fund eight quiet ones plus the working capital to ramp back up again.
The fix isn't more aggressive accounting. It's a four-week rolling cash forecast that gets reviewed every Monday morning, the same one we covered in the five numbers article. The forecast shows you the cash position you'll be in 30 days from now, given everything you currently know about money coming in and money going out. When the answer is uncomfortable, you have weeks to act, not days.
Why seasonal businesses get burned.
A landscaping company in Ontario has six strong months and six bad ones. The bad ones still come with truck payments, insurance, software subscriptions, and at least a minimum-viable office. A heating contractor has the inverse problem. Busy winters, slow summers. A pool company is busier than both for half the year and asleep for the other half. The specific shape varies; the cash problem is the same.
In the busy season, cash is flowing in faster than it's flowing out. Bank balance grows. The temptation is to interpret the growing balance as profit and start spending it accordingly. New truck, new hire, owner draws. By the time the slow season starts, the cushion that was supposed to last six months is already gone. The slow months arrive and the business has no runway.
The other failure mode is more subtle. You know intellectually that you need a cushion, but you can't tell exactly how big it has to be, so you guess. You guess low. By February the cushion is empty and you're financing payroll on the line of credit. The forecast removes the guessing.
The four-week rolling cash forecast.
The forecast is one spreadsheet, four columns, updated every Monday. Each column represents one of the next four weeks. The rows are simple: opening balance, money in, money out, ending balance.
Today's actual operating bank balance, minus any uncleared cheques you've already written. One number. Honest. The starting point for the week.
Customer payments you reasonably expect to receive this week. Not what's invoiced. What you actually expect to land. AR aged 30+ days that's been promised "this week" for three weeks doesn't count.
Every dollar leaving the account this week. Payroll, supplier invoices due, loan and lease payments, software subscriptions billed this week, insurance premiums, fuel, owner draw if you take one weekly. Be complete. The surprises are where the trouble lives.
Opening + Money In − Money Out. The number that tells you whether next Monday morning starts with cash, no cash, or a problem.
Roll it forward one week at a time, four weeks out. Each Monday, week 1 becomes "this past week" and falls off, week 5 (a new month-out projection) is added. The four-week window stays consistent.
Three levers when you see the crunch coming.
The point of the forecast is to give you time to act. When week 3 or week 4 shows trouble, you have weeks to use one or more of these three levers before it becomes today's emergency.
Pull cash in faster. Call your three largest aged receivables this week. Offer a small discount for immediate payment if needed. Tighten payment terms on the next batch of invoices to "net 15" or "due on receipt" for new customers. Move any service deposits or progress payments forward where you can.
Push cash out slower. Talk to your two or three largest suppliers about extending terms by 15 to 30 days. Most will say yes for the asking, especially if your account is in good standing. Defer any discretionary spend (new equipment, training, marketing) until the next cash-positive week.
Bridge the gap. If lever one and two aren't enough, the line of credit exists for this. Drawing it three weeks before the crunch with a plan to pay it back in 60 days is fundamentally different from drawing it the morning of a missed payroll. The forecast turns the second scenario into the first.
The slow-season strategy.
Tactical lever-pulling handles the next four weeks. The bigger structural question is what to do with the cash you generate in the busy months so you don't end up using these levers at all.
The simple rule that works: in your busiest month, take whatever percentage of the year's revenue that month represents (say, 15 percent if your peak is significantly higher than average), and ringfence that proportion of every payment received into a separate operating reserve account. By the end of the busy season the reserve holds three to four months of fixed operating costs. The slow months use the reserve, not the line of credit.
The recurring-revenue version is even better. Maintenance plans, memberships, service agreements. Revenue that flattens the curve so cash arrives whether or not the phone rings. If your trade supports it (most service trades do), the maintenance program is the most leveraged cash-flow project you can take on. It's bigger than any spreadsheet.
Build the forecast.
- Today: open the bank app. Write down today's operating balance minus any uncleared cheques. That's row 1.
- This week: build the four-week sheet. Four columns, four rows. Total time: thirty minutes once you have the inputs.
- Next Monday: review and roll forward. Update opening balance to today's actual, update Money In with the week's expected collections, update Money Out with what's scheduled.
- End of busy season: set the reserve percentage. Do the math on what your slow months actually cost in fixed expenses. Ringfence that amount before you ever see it.
Pre-built version available. The Cash Flow Planner tool has the four-week forecast formulas, recurring-payment templates, and reserve calculator already wired.
See the Cash Flow Planner →