Increased cash reserves by 155%, helping a client develop forecasting, improve cash flow and address capacity (staff) levels
The Problem: A client of ours was experiencing major cash flow problems. In addition to cash flow issues, this professional services firm struggled to stay on top of utilization and capacity (staffing) levels. Often, decisions were made without consideration of cash flow, leaving the owners to fund cash flow needs when reserves were tight. Management felt like they were constantly trying to catch up.
The Solution: Gemsbok built a financial model that tied the company’s accounting system to its sales system. The financial model provides monthly reports that estimate revenue and expenses as well as net profit or loss. The model then forecasts these measures by person and by business line to provide better insights into capacity concerns. It also allows for better planning and awareness of special situations that would impact cash flow (e.g., winning or losing a client). This awareness helps management make better staffing and spending decisions by knowing the impact these situations have on cash flow. Furthermore, it helps the sales team set appropriate goals based on needs and availability. Finally, Gemsbok worked with management to focus on obtaining retainers from new clients/projects to start them off with positive cash flow.
The Result: Implementing this model has helped our client take a proactive approach to business planning. The owner is empowered by having access to information that helps him run his business more effectively. Management is now aware of cash needs, well in advance of spending, and knows how to make staffing decisions based on reliable expectations of the pipeline. Ultimately, the CEO has much more comfort in how his business operates, as he is aware of all of the critical metrics that make his business thrive. This client has not had cash flow issues since implementing this model and has increased cash reserves by 155%.