13-week cash-flow forecast for an SME under pressure from its bank

Mzansi Fresh Packers packs citrus and avocados for export and for two large supermarket chains. Revenue last year was R96 million, but margins are thin and cash is tight. The overdraft facility is R8.5 million and it is drawn to R7.9 million. Supermarkets pay in 60 days, exporters pay when ships arrive, and growers and staff must be paid weekly. Power cuts last winter forced the business to rent diesel generators at R140,000 a month.

The bank’s business relationship manager has asked for a 13-week cash-flow forecast within ten working days. If it shows the business staying inside the facility, the bank will renew it for another year. If it does not, or if it looks like guesswork, the bank may cut the limit.

The financial manager, Thandi Mokoena, has the numbers but no time. She has given you: - opening bank balance and facility details; - an aged debtors list (you will build a synthetic version with 38 customers totalling about R21 million); - an aged creditors list (about 140 suppliers and growers totalling about R14 million); - the payroll calendar: R1.25 million every second Friday; - known one-offs: a R2.2 million packing-line deposit in week 6 and VAT payments to SARS every two months.

Done looks like a weekly forecast for 13 weeks, a headroom line against the R8.5 million limit, a downside case, a list of costed actions, and a two-page note for the bank. Thandi will use it as the base for a rolling forecast she updates every Monday.