A polymer maker spends Rs 2 crore a week more than it collects and has payroll and a loan instalment coming. Build the 13-week cash forecast and find the funding need.

Cash first breaches the Rs 5 crore floor in week 4, goes below zero in week 7 and bottoms at minus Rs 41 crore in week 13, so Nirjhar needs about Rs 46 crore of committed funding. The steady Rs 2 crore weekly deficit does most of the damage; payroll and the loan instalment decide which week it bites. Arrange the facility now, while the company still has cash and a choice of lenders.

An annual budget can show a profit while the company runs out of cash in week seven. A household that earns Rs 1 lakh a month still bounces a cheque if rent is due on the first and salary arrives on the fifth. A 13-week cash forecastA week-by-week projection of receipts and payments for the next quarter, used by treasurers and lenders to spot funding gaps before they happen. works in actual receipts and payments by week, so it shows when money runs out, not just whether it does. Thirteen weeks is one quarter: long enough to arrange funding, short enough to forecast receipts customer by customer.

Start with opening cash, add receipts, subtract payments, and carry the closing balance forward. Every ordinary week loses Rs 2 crore; payroll weeks lose Rs 8 crore, and week 9 loses Rs 17 crore. In week 4 payroll takes cash from Rs 10 crore to Rs 4 crore, the first breach. By week 7 the company is overdrawn, and the week 9 instalment pushes it to minus Rs 27 crore.

Separate the structural problem from the timing problem. The steady drain means suppliers are being paid faster than customers pay, so a facility only buys time; the working capital cycle has to change. Three moves, each sized: pushing supplier payments out by a few days, collecting overdue receivables, and asking the term lender to reschedule the week 9 instalment. Each Rs 1 crore a week recovered from the cycle cuts the 13-week need by Rs 13 crore.

Then size the facility with a buffer. A treasurer would ask for about Rs 50 to 55 crore of committed working capital limit, not exactly Rs 46 crore, because receipts in a forecast are always earlier than receipts in the bank. The best time to negotiate a facility is week 1, when the company still has Rs 18 crore of cash; in week 8 it negotiates as a borrower in trouble. Say that limitation too: the forecast assumes customers pay on schedule, and a single large customer paying two weeks late moves the trough by Rs 44 crore if all receipts slip.