Financial Consultant Strategy

Client had $2M in the bank. 30 days later: $200K left. Here's how we fixed it: The Situation (Day 1): Company: $12M revenue SaaS business Problem: CEO called panicked - "We're running out of cash" Context: Just raised $3M six months ago How do you burn $2.8M in one month? The Diagnostic (Week 1): Spent 3 days analyzing: The Cash Burn: - Payroll: $380K/month (95 people) - AWS costs: $120K/month (grew 40% in 3 months) - Marketing spend: $180K/month (mostly ads) - Office + facilities: $85K/month - Software/tools: $42K/month - Professional services: $35K/month Total monthly burn: $842K At this rate: 7 months runway (not 30 days) So what caused the crisis? The Real Problem: Timing - Annual software renewals hit: $340K - Quarterly AWS pre-pay: $180K - Year-end bonuses paid: $420K - Insurance renewal: $65K - Legal fees (one-time): $48K Total unexpected cash out: $1.05M in one week Plus: Revenue timing - Expected $800K payment delayed 45 days (customer payment terms) - Two customers churned = $140K ARR lost - Three deals pushed to next quarter The Perfect Storm: - $1.05M unexpected expenses - $800K revenue delayed - Normal $842K monthly burn Cash crisis. The Fix (Week 2-8): Immediate Actions (Week 1-2): 1. Renegotiate Payment Terms - AWS: Moved from annual to monthly (-$180K immediate) - Software vendors: Extended payment 60 days (-$180K immediate) - Office lease: Negotiated 60-day payment delay - Result: $360K cash preserved 2. Accelerate Collections - Called top 20 customers with outstanding invoices - Offered 3% discount for immediate payment - Collected $420K in 10 days 3. Pause Non-Essential Spend - Marketing: Cut ad spend 60% (kept only proven channels) - Hiring: Froze 8 open positions - Travel: Canceled conference attendance - Result: $180K monthly savings Cash position after 2 weeks: $780K (up from $200K) Structural Fixes (Week 3-8): 1. Cash Flow Forecasting System - Built 13-week rolling cash flow forecast - Tracked: receivables, payables, burn, revenue - CEO reviewed weekly (previously never looked at cash) 2. Revenue Operations - Changed payment terms: Net 60 → Net 30 for new customers - Required 50% upfront for annual contracts - Implemented late payment fees - Result: Improved cash collection by 18 days 3. Cost Structure Analysis - AWS: Optimized infrastructure (saved $38K/month) - Software: Eliminated 12 unused tools (saved $14K/month) - Renegotiated vendors: (saved $22K/month) - Result: $74K/month permanent savings 4. Pricing Adjustment - Raised prices 15% for new customers - Improved margins: 68% → 74% - No customer complaints (pricing was below market) The Results (6 Months Later): Voor: - Cash: $2M (but volatile, crisis-prone) - Monthly burn: $842K - Runway: 7 months (assuming no surprises) - Cash management: Reactive Na: - Cash: $2.8M (stable, growing) - Monthly burn: $768K - Runway: 11 months (with visibility) - Cash management: Proactive What Made This Work: ✅ Speed: Made decisions in days, not weeks ✅ Doorzichtigheid : CEO understood cash situation clearly ✅ Systems: 13-week forecast became weekly ritual ✅ Structural fixes: Not just Band-Aids, fixed root causes The Cash Flow Lessons: Lesson 1: Profitability ≠ Cash Flow They were "profitable" on P&L. But cash flow was broken. Why? - Annual contracts (revenue recognized monthly, cash upfront missed) - Long payment terms (Net 60 = cash delayed) - Lumpy expenses (renewals hit all at once) Lesson 2: Cash Flow Forecasting is Non-Negotiable If you don't forecast cash 13 weeks out, you will have surprises. Bad surprises. Lesson 3: Payment Terms Matter More Than Price Getting paid faster > charging more Net 30 at $100K is better than Net 60 at $105K. Lesson 4: Build Cash Buffers Rule of thumb: 6 months operating expenses in cash. For this company: $5M minimum cash. They had $2M. Too low. The Fractional CFO Role: I'm not their accountant (they have one). I'm not their bookkeeper (they have one). I'm their financial strategist who: - Forecasts cash 13 weeks out - Identifies problems before they become crises - Fixes structural financial issues - Builds financial discipline That's fractional CFO work.