BLOCK 01Profit is not bank balance
Show: Harbor Supply opens with $18,000. Customers are expected to pay $8,000 in week one, while the business pays $12,000. Closing cash is $14,000. A $20,000 invoice created in that week is not an extra $20,000 of cash unless the customer actually pays it.
Ask learners to do: Choose which date matters to the cash forecast: delivery, invoice, or actual payment. Then check the example below.
Listen for: An invoice is proof of a claim to collect, not proof that the bank balance has increased.
Model answer to the check
Week four, if payment is reasonably expected then. Track the invoice separately in receivables; do not count it as week-one cash.
Forecast what will actually clear
Show: Weeks one and two close at $14,000 and $10,000. Week three opens at $10,000, collects $6,000 and pays $20,000. It closes at negative $4,000. The warning appears before the payment comes due, while there is time to act.
Ask learners to do: Use the forecast below to spot the first week that falls below zero. Pick the closing balance in the interactive check.
Listen for: A positive year-end total cannot pay a week-three bill. Look at the timing and minimum balance, not just the final row.
Model answer to the check
Week three starts with $10,000 and has $6,000 incoming against $20,000 outgoing, leaving negative $4,000. Week four then starts at negative $4,000 and ends at negative $2,000.
Respond before the shortfall
Show: If an overdue $8,000 is collected in week three, that week's closing cash rises from negative $4,000 to $4,000. If a supplier also agrees to move $5,000 of week-three payment to week five, week three instead closes at $9,000. Week five then carries the deferred $5,000 payment; the obligation has moved, not vanished.
Ask learners to do: Compare two actions: collect an overdue invoice or defer a supplier payment. Select what each changes in the interactive check.
Listen for: Moving a bill to another week buys time but does not erase the bill.
Model answer to the check
No. It changes the timing of cash; the supplier amount remains payable. The accounting treatment depends on the original transaction.
Keep the 13-week view alive
Show: At the next review Harbor Supply learns that week-four collections will arrive one week late. Move that receipt into week five, recompute every later opening balance and tell the owner which obligations now lack coverage.
Ask learners to do: Look at a late customer payment and choose the correct forecast update in the interactive check.
Listen for: A forecast is a decision tool that changes with evidence, not a promise that sales will turn into cash on schedule.
Model answer to the check
Replace the forecast with the actual, move the receipt to a defensible new date, rerun later weeks and flag the risk. Do not leave the original receipt in place as if it arrived.
