Table of Contents
- What is a 13 week cash flow model
- How the 13 week cash flow model is used in practice
- Download the Free 13 Week Cash Flow Model Excel Template
- The 13-week cash flow model is a tool for decision making
- Why is the TWCF So Important?
- Modeling an integrated 13 Week Cash Flow Model
- The 13 Week Cash Flow Output
- Cash to EBITDA Reconciliation
- Working capital roll-forwards
- Accounts receivable roll-forward
- Inventory roll-forward
- Accounts Payable Roll-Forward
- Accrued Wages Roll-Forward
- Borrowing base (revolver) modeling
- Additional TWCF Model Features
What is a 13 week cash flow model
As the name suggests, a 13-week cash flow model is a weekly cash flow forecast. The 13 week cash flow uses the direct method to forecast weekly cash receipts less cash disbursements. The forecast is frequently used in turnaround situations when a company enters financial distress in order to provide visibility into the company’s short-term options.
How the 13 week cash flow model is used in practice
AHP’s TWCF shows the company expects to need the additional financing almost immediately on June 7, 2019, followed by a second DIP draw July 5, 2019
While every 13-week cash flow model will show receipts and disbursements that are unique to its business and circumstances, most thirteen week cash flow models follow a generally similar structure:
Download the Free 13 Week Cash Flow Model Excel Template
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The 13-week cash flow model is a tool for decision making
By identifying the immediate cash flow needs at the most granular level, the model helps distressed firms evaluate the immediate impact of a variety of possible operational, financial, and strategic remedies:
Why is the TWCF So Important?
A credible TWCF often quite literally is the difference between survival and Chapter 7 liquidation.
The reality for many liquidity-constrained companies under financial distress is that even if they are viable as a going concern in the long run, they must convince prepetition lenders or a third party to extend debtor-in-possession (DIP) financing to bridge to a medium term and ultimately a long term plan. Securing this financing is almost always supported by credible 13-week cash flow forecast.
The TWCF is designed to increase the level of transparency and trust between management, creditors and other stakeholders.