As a Financial Leader for a growing SME, one of the biggest tests I faced was a near-catastrophic cash flow crisis that threatened to stop the operations. It was one of the most stressful periods in my career.
We had secured two huge new projects back-to-back, a major growth milestone. However, as costs are incurred and billed work remains unpaid, our cash flow is under considerable strain. This situation is exacerbated by the simultaneous progression of both projects. Payments from clients have been delayed due to pending approval of payment certificates, tying up our receivables for months. Despite these financial constraints, we must continue to cover ongoing expenses such as supplier payments, salaries, rent, and other operational costs to ensure timely project delivery.
When I ran the cash flow projections, that sinking feeling hit me – we were going to zero out our bank balance within 4 weeks. With statutory obligations looming, I had two tough choices: ask suppliers to bear the brunt temporarily or go for emergency funding at high costs.
I decided to have very frank discussions with key suppliers, negotiating extended payment terms for a few months to reserve cash for essentials. A massive gamble that risked jeopardizing hard-earned vendor relationships and credibility.
But with a rapidly depleting runway, this was my only lifeline to keep the company going until client payments cleared. So began an intense firefight, making tough decisions daily to conserve every $.
The experience was a wake-up call on the financial leader’s highest calling – being the absolute lifeline of an enterprise rather than just a record-keeper.
Here are the key focus areas that helped me navigate that crisis:
Complete transparency with suppliers to maintain trust
Stringent cash flow forecasting down to the last fillip
Renegotiating payment terms via tough conversations
Seizing every incoming cash opportunity
Enforcing uncompromising fiscal discipline across the team
It was a gruelling test of crisis management, relationship building and operational resilience. While tumultuous, I’m proud we powered through without burning bridges.
This experience fundamentally reshaped how I view a financial leader’s duties – going beyond records to being the vigilant guardian of a company’s very existence.
To my fellow finance professionals, have you faced similar crises that redefined your perspective on your responsibilities? I’d love to hear your experiences and any lessons you’d share.