Scaling But Struggling? Why Cash Flow Kills Growing Businesses (And How to Fix It)
Growth is exciting. New clients, bigger deals, more staff—it’s everything you wanted, right?
Except… the bank balance tells a different story. More revenue should mean more cash, but somehow, you’re constantly scraping by.
You’re not alone. 80% of business failures happen due to cash flow problems—and many of those businesses were actually profitable.
The Problem: Scaling Too Fast Without a Cash Buffer
Meet Nimbus Analytics, a data consultancy that was crushing it. Their revenue had doubled in 12 months, they’d hired 15 new employees, and they were onboarding their biggest client ever.
Then, reality hit.
The big client’s payment terms? 90 days.
Their payroll? Monthly.
Their rent, software, and contractors? Due immediately.
The result? A profitable company that had no cash. Their finance director frantically called the bank for an emergency loan. It was too late.
How a Fractional CFO Would Have Saved the Day
A Fractional CFO doesn’t just track cash flow—they plan for these exact situations before they become crises. Here’s how they would have handled Nimbus Analytics’ situation:
🔹 Build a Realistic Cash Flow Forecast – Not just a spreadsheet, but a rolling 12-month forecast showing:
✔ Expected client payments vs. real payment timelines.
✔ Monthly payroll, rent, tax, and supplier costs.
✔ Best- and worst-case scenarios for cash reserves.
🔹 Negotiate Better Payment Terms (on Both Sides) – Instead of waiting 90 days to get paid, a CFO would:
✔ Set up structured payment plans for big contracts (e.g., 50% upfront, 25% milestone, 25% on delivery).
✔ Negotiate longer payment terms with suppliers to match income streams.
✔ Introduce invoice financing where needed to smooth cash flow gaps.
🔹 Structure Growth to Avoid a Cash Crunch – Rather than hiring too fast, a CFO would:
✔ Phase hiring to match revenue reality—not just forecasts.
✔ Set up an emergency cash buffer (3-6 months of overheads).
✔ Ensure funding options (credit lines, overdrafts) are pre-approved before they’re needed.
The Outcome?
Instead of scrambling for cash and panicking over payroll, Nimbus Analytics had a controlled, sustainable growth plan. Their cash flow was predictable, not a constant stress, and their CEO could focus on winning more deals—without the sleepless nights.
