A thirteen-week operating forecast can help you avoid being surprised by tight cash-flow weeks, and help you prepare for them in advance.
The first real cold snap of the season is good news and bad news at the same time. Good news because the phones start ringing and the trucks start rolling. Bad news because that is exactly when your cash position gets squeezed hardest. If you have not planned for it, you will find out about the squeeze from your bank, not from your own numbers.
I have sat across the table from a lot of dealers in exactly that spot. Degree days spike, delivery volume jumps, fuel has to be bought and paid for today, and the cash from budget plan customers trickles in on its own schedule, regardless of how cold it gets outside. The dealers who handle this well are not the ones with the biggest lines of credit. They are the ones who know, almost to the week, when cash gets tight and by how much. That is the whole playbook: forecast it, size your borrowing to it, and never let a cold week turn into a liquidity emergency.
Why Annual Budgets Don’t Work for a Seasonal Business
Most businesses can run on a monthly budget and adjust as they go. A heating oil or propane dealer cannot, because the entire business model is a mismatch between when cash goes out and when it comes in. You are buying inventory ahead of a cold spell that may or may not arrive as forecast. You are paying drivers and running trucks on days when the temperature drops, not on a fixed schedule. And a meaningful share of your revenue comes from budget plan customers making level payments that have nothing to do with how much fuel they are using that week.
A monthly view smooths all of this into something that looks manageable on paper and then falls apart in real life. January can look fine in aggregate and still include a ten-day stretch where you are paying for fuel, payroll, and insurance before a single budget plan payment clears. That kind of a stretch is where dealers get into trouble, not because the business is not profitable, but because profit and cash are not the same thing, and nobody was watching the gap closely enough to see it coming.
Building a Week-by-Week Cash Forecast That Works
The fix is a rolling thirteen-week cash forecast, updated weekly, not monthly. Thirteen weeks is long enough to see a full cold snap and its aftermath, and short enough that you are forecasting reality instead of guessing at a season.
Start with cash in. Break out budget plan collections separately from cash sale collections, because they behave completely differently. Budget plan money is predictable and steady. Cash sale money follows the weather and your delivery schedule, so tie that line to actual degree day data and your delivery calendar, not last year’s average.
Then build cash out. Fuel purchases are your biggest and most volatile line, and they need to be modeled against your actual buying strategy, whether that is spot purchases, a prebuy program, or hedged contracts, because each of those has a different cash timing profile even when the underlying fuel cost is similar. Add payroll, which spikes with overtime during heavy delivery weeks. Add fixed costs like insurance, debt service, and lease payments on their actual due dates, not smoothed across the month.
Once you have both sides, the forecast tells you something a P&L never will: the specific week your cash balance is going to be at its lowest point, and how far below zero it will go without a credit line to cover it. That number is the whole point of the exercise. Everything else in this playbook flows from knowing it.
Sizing Your Borrowing Capacity to the Real Peak, Not the Average
Once you know your projected low point, you can size your line of credit properly. Too many dealers set their credit line based on last year’s average draw, or on what the bank offered, rather than on the actual trough their own forecast identifies. That is backward. The line needs to cover the worst realistic week, with a cushion, not the typical week.
Look back at your peak draw in each of the last two or three winters. If this year’s forecast shows a deeper trough than that, because fuel costs are higher or volume is up, your capacity needs to grow with it. This is a conversation to have with your lender in September or October, while you both have time to think it through, not in the middle of a January cold snap when you are calling because you are already short. Lenders respond very differently to a dealer who shows up with a thirteen-week forecast and a clear ask than to one who shows up needing cash by Friday. The first conversation gets you better terms. The second one gets you a much harder conversation, if it gets you anything at all.
Avoiding the Emergency Liquidity Trap
Emergency liquidity events almost never come out of nowhere. They come from a forecast that was not being watched, or was not being updated as conditions changed. Set yourself a handful of early warning triggers: a projected cash balance that dips within a defined cushion of your credit line limit, a week where fuel costs jump faster than budget plan collections can absorb, or a stretch of extreme cold that pushes volume well past what you modeled. Any of those should trigger a real conversation with your lender before the shortfall shows up in your bank balance, not after.
It is also worth building in a periodic true-up on your budget plan accounts. Those level payments are calculated on assumptions made months earlier, and if this winter is colder or fuel costs are higher than the estimates baked into those plans, the gap between what customers are paying and what the fuel costs can widen every week it goes unaddressed. Catching that gap in December is a manageable adjustment. Catching it in March is a much bigger problem, and by then it has already been sitting on your balance sheet as an unfunded shortfall for months.
Map Your Strategy Now
None of this requires sophisticated software or a finance department you do not have. It requires a weekly habit: update the forecast, check it against your credit capacity, and flag anything that is drifting off plan before it becomes urgent. Dealers who do this consistently do not avoid tight weeks - nobody in this business does. What they avoid is being surprised by them. If you have not built a thirteen-week forecast for this winter yet, now – before the first real cold snap – is the time to sit down with your accountant and build one.
Marty Kirshner leads the Energy Practice Group at Gray, Gray & Gray, LLP – A Frazier & Deeter Company providing business consulting and accounting services to the propane and heating oil industry. He can be reached at (781) 407-0300 or mkirshner@gggllp.com.
