How do you build a thirteen-week cash forecast for a tax practice acquisition?

Thirteen-week acquisition cash forecast is a rolling weekly schedule of opening cash, expected receipts, payments, financing, and minimum available cash during the first operating period after a practice purchase. It identifies when obligations need money rather than relying on annual earnings or average monthly collections.

Why use thirteen weeks after buying a practice?

Use it to expose near-term funding needs while people, billing, systems, and payment obligations change. Thirteen weeks is a planning horizon here, not a lender rule or guarantee that all transition issues resolve within a quarter.

Begin with the buyer hub and establish who owns the cash forecast. The preparer needs access to actual balances, billing information, payroll, debt dates, and approved spending rather than only a projected income statement.

The seasonality and cash-flow guide addresses the wider operating cycle. This weekly tool focuses on payments and receipts within that cycle, where a profitable year can contain a funding gap.

Use one row per week with actual date boundaries. Keep weekends, bank processing, payroll dates, and contractual due dates visible. A payment scheduled in a different reporting week can change the lowest cash balance even when quarterly totals remain the same.

What belongs in opening cash?

Include only funds actually available to the acquired operation at the forecast’s opening date. Reconcile them to the closing schedule and bank evidence, identifying any restrictions or designated uses.

Separate operating reserves from seller cash, excluded receivables, client custody funds, escrow, tax designations, and undrawn borrowing capacity. A balance visible in a combined report is not automatically available for payroll.

Assume an illustrative acquisition funds $60,000 opening operating cash after price and transaction costs. This amount is a selected assumption, not a recommended reserve for every practice. The weekly schedule below tests whether it meets the chosen cash floor.

A credit line should appear only under supported availability and draw assumptions. Approved limits, borrowing conditions, draw timing, interest, and repayment need to agree with the financing documents and forecast.

How should collections be entered?

Enter expected cash receipts using evidence about billed work, payment terms, actual client patterns, and billing readiness. Earned revenue and a sent invoice are different stages from collected cash.

The archived Journal of Accountancy practice billing and collection discussion provides historical context for aligning delivery, invoices, and receipts. Its discussion is not evidence that this practice’s balances will be paid in a selected week.

Tag each receipt source as opening receivable, post-closing service fee, deposit, or other defined category. For seller-retained receivables, identify beneficial ownership so seller cash is not included in buyer operating receipts.

Use separate timing assumptions for different services. A recurring monthly agreement, annual tax engagement, and disputed project balance need different evidence. Do not apply one collection percentage to all three without review.

Which payments are most often missed?

Include payroll and employment costs, necessary owner compensation, vendor payments, premises, debt principal and interest, tax payments, capital purchases, transition work, and other approved uses on actual dates.

The employee-benefits acquisition guide helps identify labor costs beyond stated salary. A cash forecast built only from staff wages may omit employer contributions, paid leave obligations, or changed coverage costs.

Seller debt needs its own contractual schedule. IRS installment-sale guidance distinguishes interest from sale principal for applicable tax analysis; cash planning must still fund both when due. Do not include only the interest expense shown on a projected income statement.

Assume required owner labor is already included in the forecast’s operating payments. Additional distributions are separate decisions. The same work pay should not be counted twice under payroll and owner draws.

What does a complete weekly example show?

It shows the lowest available cash, not just the ending balance. The following amounts are illustrative thousands of dollars; all receipts belong to the buyer’s operation, with no seller receivables or client custody balances included.

Assume weekly operating payments of $15,000, additional $8,000 bank payments in weeks four, eight, and twelve, a $15,000 seller installment in week thirteen, and $10,000 migration spending in week two.

Total receipts are $309,000. Payments are $195,000 operating costs, $24,000 bank payments, $15,000 seller payments, and $10,000 migration: $244,000. Opening $60,000 plus receipts less payments equals $125,000 ending cash.

The minimum is $39,000 in weeks four and five. Against an assumed $50,000 operating floor, the gap is $11,000. Opening funding of $71,000 would preserve that floor if all other assumptions hold.

How should delayed collections be tested?

Move receipts to their revised dates without also treating them as permanently lost. Then run a separate loss scenario when evidence suggests they may not be collected.

Assume week-six $40,000 receipts move to week ten and week-seven $60,000 move to week eleven. Annual and thirteen-week receipts are unchanged, but cash falls to $24,000 at week six and $9,000 at week seven.

Against the $50,000 floor, the delayed case needs $41,000 additional opening funding rather than $11,000. Opening cash would need to be $101,000 to preserve that floor under the selected delay.

This calculation does not say a lender will provide the gap. Named buyer equity, permitted borrowing, revised timing, or supported cost changes need to fund it. A projected receipt after the weak week cannot pay an earlier obligation.

Does the forecast satisfy acquisition underwriting by itself?

No. It is an operating liquidity tool that should agree with broader normalized earnings, financing, tax, and transaction models. It does not replace the lender’s required analysis or establish professional readiness.

The current SBA SOP 50 10 8.1 requirements specifies ownership-change category requirements. Its rules include category-specific debt-service and earnings analysis; a buyer’s post-closing weekly forecast does not independently establish compliance or approval.

Separate actual evidence, supported forecasts, and unresolved assumptions. A forecast line labeled loan proceeds needs financing evidence; a line labeled staff saving needs a real expense change and effective date.

How do you build and update the forecast?

Use a controlled weekly process that rolls forward actual results and preserves the assumptions changed. Avoid overwriting history until a reviewer can no longer explain why cash differs from the opening plan.

1. Reconcile opening available cash, restrictions, designations, and supported financing availability.
2. Enter receipts by beneficial owner, service category, evidence, and expected bank-availability date.
3. Schedule operating payments, debt, taxes, transition spending, and approved investment on actual dates.
4. Calculate each ending balance, minimum cash, and the gap against the stated operating floor.
5. Run delayed-receipt and permanent-loss cases separately, naming capital sources for unresolved gaps.
6. Replace the completed week with actual results, explain variances, and add the next forecast week.

Assign a reviewer to challenge unusually early collections, omitted costs, and unsupported borrowing. A forecast that balances because an unexplained cash injection fills every gap is not a funding plan.

Track variances by cause: timing, permanent loss, scope, price, expense, or financing. This makes next week’s assumptions more informative than simply adjusting the ending cash to match the bank.

What should the buyer do with a forecast gap?

Resolve it before the money is required. The response depends on evidence, contract obligations, service capacity, financing conditions, and the size and duration of the gap.

Possible actions include more committed equity, approved borrowing, a different installment schedule, a supported billing change, postponed optional spending, or a revised acquisition. Each changes a specific assumption and should be recalculated.

The minimum floor itself also needs rationale: payroll exposure, collection uncertainty, deadlines, and access to approved liquidity. It is a management assumption in this example, not a universal regulatory requirement.

A disciplined weekly forecast makes the opening funding decision reviewable. The $125,000 ending balance does not excuse the earlier $11,000 base-case floor gap or the larger gap under delayed collections.