How we helped a client go from bleeding $1M in cash every month to profitable in 3 months using micro-cash flow management.
Micro cash-flow management is a term we coined at my fractional CFO and accounting firm. It's a practice of hyper-focusing on cash flow in your business.
Think weekly, even daily tracking, proactive payment prioritization, and ruthless expense scrutinizing – all geared toward maximizing every dollar.
Micro-cash flow management in action:
Weekly Cash Flow Tracking: Instead of the typical monthly monitoring, we implemented weekly cash flow tracking for agile cash control.
This granular insight, exceeding the standard annual expense review, allowed us to:
Pinpoint exact payment due dates: We knew precisely "what needed to be paid and when," enabling strategic prioritization and potential payment negotiation.
Leverage payment flexibility: By identifying immediate cash needs, we could negotiate payment extensions for certain vendors or partially fulfill invoices until client receivables arrived.
Expense Categorization: Emphasis on differentiating revenue-linked and operational expenses, we categorized monthly expenses as either:
Directly revenue-generating: These expenses, crucial for client projects, received prioritized payment during cash dips.
Essential for core operations: Non-revenue-generating but necessary expenses were scrutinized for potential temporary reductions or cost-saving alternatives.
By applying micro-cash management principles, we:
- Maintained client project delivery: Despite revenue fluctuations, we ensured on-time event production by prioritizing revenue-generating expenses and creatively managing cash flow.
- Preserved operational stability: While optimizing costs, we protected essential operational expenses, preventing disruptions and safeguarding long-term business viability.
What other ways have helped you manage your cash in crisis?