Tool 03 · the lab · Read: Ch. 22 — The 13-Week Model · Ch. 13 — DIP Financing

13-Week Cash Flow Model

A direct receipts-and-disbursements forecast on a weekly grid. Receipts come from applying a collection curve to the receivables ageing plus new sales; disbursements are broken out by category. The output is the trough liquidity week — the number that governs how much time exists and therefore which outcomes are reachable.

01 Opening position

Opening cash ($M)

Revolver availability ($M)

Undrawn and actually available under the borrowing base, net of LC reserves.

Receivables balance ($M)

Collection period (weeks)

Weeks over which the opening ageing converts to cash, straight-lined.

02 Weekly run-rate

New sales collected weekly ($M)

Payroll ($M per fortnight)

Paid in even weeks. Payroll has hard dates; that is why it is modelled separately.

Vendor payments ($M weekly)

Other opex, rent, utilities ($M weekly)

Professional fees ($M weekly)

In a filed case this becomes one of the largest lines. Set it to zero out of court.

Cash interest & amort ($M weekly)

03 DIP covenant

Permitted cumulative variance (%)

Tested here on cumulative receipts against budget. Typical DIP facilities permit 10–15%, tested weekly.

Actual receipts vs forecast (%)

Set below 100 to see when a persistent collections miss breaches the covenant.

04 Headline

—

trough total liquidity — the lowest point across the 13 weeks

05 Liquidity path

total liquidity (cash + revolver) cash only zero line

Wk	Receipts	Disburse	Net	Cash	Revolver	Liquidity	Cum. var.

All figures $mm. The highlighted row is the trough week. Liquidity = cash + undrawn revolver; it is the number that governs how much time exists.

Reading this model

Receipts: Cash actually arriving, not revenue recognised. Two components: the opening receivables ageing converting over the collection period, plus collections on new sales. When the ageing runs out — here after the collection period — receipts step down sharply. That step is the single most common surprise in a first forecast.
Disbursements: Cash leaving. Payroll is modelled separately because it lands on fixed dates and cannot be delayed; vendors can be stretched, payroll cannot. Professional fees are zero out of court and become one of the largest lines once a case is filed.
Net: Receipts less disbursements for that week. Negative weeks are normal — a business with fortnightly payroll alternates. What matters is the cumulative direction, not any single week.
Cash / Revolver / Liquidity: Liquidity is cash plus genuinely available revolver. Watch the revolver: availability is set by a borrowing base tied to eligible receivables and inventory, so it shrinks exactly when the business deteriorates. A liquidity line that looks flat because of revolver capacity can fall away without warning.
Trough liquidity: The lowest point across the thirteen weeks, and the number that governs everything. It determines how much time exists, and therefore which outcomes are even reachable. A company with eleven weeks of runway cannot run a going-concern sale process that takes sixteen.
Cumulative variance: Actual cumulative receipts against budget. DIP facilities permit 10–15% deviation, tested weekly; breaching it is an event of default that hands control to the lenders. A persistent collections miss compounds — this is why the covenant is cumulative rather than weekly.
What to look for: Three things. Does the trough fall inside the forecast window, or beyond it? Does the variance line trend down rather than oscillate — a trend means the collection assumption is wrong, noise means timing. And how much of the liquidity is revolver rather than cash, because that portion can be withdrawn.

The exercise

Pull a real DIP budget exhibit from any Chapter 11 docket, enter its opening position and run-rates here, and see whether your trough matches theirs. Then set "actual receipts vs forecast" to 90% and find the week the variance covenant breaks. That week is the real deadline in the case — not the milestone dates in the DIP order.