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How to forecast cash flow when donor payments arrive late

By the EMPOBase team · · 4 min read

Short answer

Build a rolling forecast of cash in and cash out for the next 13 weeks. List donor payments by their expected arrival date, not the date in the agreement, and add a delay based on past experience. List fixed and planned payments. Show the closing balance each week, test a late-payment case, and agree actions in advance for any week that goes below your minimum.

Key points

  • Forecast by week for 13 weeks, and update it every week.
  • Use the expected arrival date for donor money, not the contract date.
  • Always test a worse case with longer delays.
  • Set a minimum cash level and plan actions before you reach it.

Why do late donor payments hurt?

Work does not wait for money. Salaries, rent and suppliers are due on fixed dates. A donor’s payment is often tied to a report, an approval or a bank process, and it can slip by weeks.

When that happens, staff worry, suppliers wait and managers start moving money between grants without a record. A cash forecast lets you see the gap weeks ahead, so you can choose a calm response.

What is a cash flow forecast?

A cash flow forecast is a table of expected money in and out over time, with a closing balance for each period. It is different from a budget. A budget says what you plan to spend. A forecast says when cash will actually move.

How do you build a 13-week forecast?

  1. Start with the opening balance across all bank accounts and cash.
  2. List expected receipts. For each donor, write the amount and the week you expect it, based on report dates and past delays.
  3. List expected payments. Salaries, rent, taxes, sub-grant tranches, supplier invoices and approved orders.
  4. Calculate net cash for each week: receipts minus payments.
  5. Calculate the closing balance and carry it to the next week.
  6. Set a minimum cash level, such as a few weeks of core costs.
  7. Mark the weeks that fall below the minimum.

Use a simple table:

WeekOpeningReceiptsPaymentsClosing
1
2
3

How do you plan for delays?

Add a delay to each donor receipt. Use the real history: how long did the last three payments take after the report went in? Then run two versions:

  • Expected case. The typical delay.
  • Worse case. Add several more weeks for your slowest or biggest donors.

If the worse case shows a gap, you know which week to protect and which donor to chase. Check restricted funds separately. A pooled balance can look healthy while one grant has no cash behind it. See our article on restricted and unrestricted funds.

How should you respond to a gap?

Agree the actions in advance, so you do not argue in a crisis:

  • Ask the donor for the payment date, and offer any missing paper.
  • Send reports early, since a report often triggers payment.
  • Delay spending that is not urgent.
  • Use unrestricted money or an internal loan with approval and a repayment date.
  • Talk to staff and suppliers openly before a missed date.

How often should you update?

Update the forecast every week, and roll it forward by one week. Compare last week’s forecast with what happened, and learn from the gaps. Review it with the head of finance and the country director.

A worked example

An NGO has an opening balance of 80,000 and a minimum cash level of 60,000, which covers about three weeks of core costs.

Monthly payments are 90,000 for salaries and rent, plus a supplier payment of 25,000 in week five. A donor pays 100,000 on report approval. The report went in four weeks ago, and past payments took six weeks, so the forecast puts the receipt in week three.

Under this view, cash stays above 60,000 through the quarter. The worse case adds four weeks of delay, so the receipt falls in week seven. Then the forecast shows the balance falling to 15,000 in week six. The gap is clear weeks ahead.

The finance lead acts. She writes to the donor to confirm the payment date, delays a non-urgent purchase of 12,000, and arranges an approved internal loan from unrestricted funds of 20,000 with a repayment date. The balance never goes below the minimum.

Tips to improve accuracy

  • Record the real date each donor payment arrives, and compare it with your forecast.
  • Keep a table of donor payment history: report date, approval date, payment date.
  • Include small items such as bank fees and taxes. They add up.
  • Do not count money that is not yet in a signed agreement.
  • Show restricted and unrestricted cash separately.

What to share and with whom

Share a one-page summary each week with the head of finance and the country director: the closing balances, the weeks below the minimum and the actions in hand. Add a note about any donor payment that is more than two weeks late. Clear, regular information helps senior staff decide early, rather than react late. Check your donor agreements for rules on advances, interest and how grant money may be held.

Where EMPOBase fits

EMPOBase has Cash Management, with Balances, Accounts, Movements, Reconciliation and Pay Requests, and a Cash Flow Forecast feature in the Finance module. Budget vs Actual and Restricted Funds show what is spent, committed and available per award. Exchange rates are kept by your finance team, not pulled from a live feed. EMPOBase does not make bank transfers, so you confirm money movement in your bank. See the platform overview.

Questions people ask

Why 13 weeks and not a full year?

Thirteen weeks is long enough to see problems and short enough to be accurate. Keep a separate, rougher view for the full year.

How do I estimate how late a donor will be?

Look at the time from each past report to the matching payment. Use the typical delay, and add a safety margin for donors that have been slow.

What should we do if cash will run out?

Act early. Options include asking the donor for an advance, delaying non-urgent spending, using unrestricted funds under your borrowing rule, or agreeing a short credit with a supplier.