Cash flow for small businesses: a 13-week model with the tax dates built in
Profit on paper and cash in the bank are two different things. Plenty of profitable companies hit a cash gap just before the 14th or the 25th of the month. Here is a simple 13-week model that shows the problem in time — while you can still do something about it.
- Plan cash weekly for 13 weeks ahead and update it every Monday.
- Put every tax date in the model: VAT on the 14th, payroll contributions and tax on the 25th, advance tax.
- Keep a buffer of at least one month of fixed costs plus the next tax payments.
- The fastest lever is collecting receivables — invoice immediately and chase overdue payments.
Why profit isn't cash
Picture a company with €40,000 of monthly sales and a 15% margin. On paper all is well. But if customers pay after 45 days while salaries, rent, VAT and contributions go out every month, the company is constantly financing its customers. Growth makes the problem bigger, not smaller.
That's why, as well as the profit and loss account, you need a cash forecast — when exactly money comes in and goes out.
The 13-week model
The model is a simple table: columns for the next 13 weeks and rows for receipts and payments. Every Monday you add a new week and replace last week's forecast with the actual figures.
| Line | Week 1 | Week 2 | Week 3 | … |
|---|---|---|---|---|
| Opening cash | 18,000 | 21,500 | 9,800 | |
| Customer receipts | 12,000 | 9,000 | 14,000 | |
| Suppliers | − 6,500 | − 4,000 | − 5,000 | |
| Salaries (net) | − 11,000 | |||
| VAT payable (14th) | − 3,200 | |||
| Payroll contributions and tax (25th) | − 5,400 | |||
| Rent, leasing, loan | − 2,000 | − 2,500 | ||
| Closing cash | 21,500 | 9,800 | 13,400 |
Even in this short example week 2 is critical: salaries and VAT fall together. Knowing that three weeks earlier, you can speed up collections, delay a purchase or agree different terms with a supplier.
The tax dates that belong in the model
- 14th — VAT payable (if registered).
- 25th — payroll contributions and income tax; self-employed contributions.
- 15 April, 15 July, 15 October — advance corporate tax for quarterly payers (monthly payers: by the 15th of each month).
- 30 June — annual corporate tax.
- Local taxes — property tax, waste fee and vehicle tax (by 30 June and 31 October, or in full by 30 April with a discount).
Exact dates, adjusted for public holidays, are in our Bulgarian tax calendar — you can add them to your own calendar too.
How much buffer do you need?
A practical rule for a small company: keep cash of at least one month of fixed costs (salaries with contributions, rent, leases, subscriptions) plus the next tax payments. If the business is seasonal or depends on a few large customers, the buffer should be bigger.
A useful habit is to move the VAT you collect into a separate account. That way you don't spend money that really belongs to the state.
Five levers for better cash flow
- Invoice immediately — not at the end of the month. Every day of delay is a day later payment.
- Review overdue invoices weekly and chase politely but promptly.
- Ask for advances on projects and made-to-order work.
- Negotiate supplier terms that match the terms you give customers.
- Control stock — goods on the shelf are frozen cash.
What to track every month
- Average collection period — how many days customers take to pay on average.
- Overdue receivables — amount and number of customers over 30 and over 60 days.
- Runway — how many months of fixed costs your cash covers.
- Forecast vs actual — the smaller the gap, the more you can trust the model.
Frequently asked questions
What is the difference between profit and cash flow?
Profit records income and costs when they arise; cash flow records when money actually comes in or goes out. A sale on credit boosts profit immediately, but the money arrives weeks later.
Why 13 weeks?
It's one quarter — long enough to see tax payments, payroll and seasonality, and short enough to be accurate.
What payment terms can I agree with another business?
Under the Bulgarian Commerce Act, payment terms between businesses should as a rule not exceed 60 days, unless expressly agreed otherwise and not grossly unfair to the creditor.
Do I need special software?
No. A spreadsheet updated weekly is plenty for a small company. Discipline matters more than the tool.
