CASE STUDY
Prepare Forecasts and Projections
155% increase in cash reserves
A financial forecasting model helped one professional services client improve cash flow visibility, address capacity concerns, and increase cash reserves by 155%.
The challenge
A professional services client was experiencing ongoing cash flow problems.
In addition to cash flow concerns, the business struggled to stay ahead of utilization and capacity planning. Staffing decisions were often made without a clear understanding of future revenue, expenses, or cash needs.
When reserves were tight, the owners were left to fund cash flow gaps. Management felt like they were constantly reacting instead of planning ahead.
What changed
Gemsbok built a financial model that connected the company’s accounting system with its sales system.
The model provided monthly reports that estimated revenue, expenses, and expected net profit or loss. It also forecasted these measures by person and by business line, giving leadership better visibility into capacity concerns and staffing needs.
This helped the company plan around situations that could significantly affect cash flow, such as winning or losing a client, changing staffing levels, or adjusting spending.
The model supported better planning across several areas:
Cash flow forecasting to help leadership anticipate future cash needs
Revenue and expense projections to estimate expected profit or loss
Capacity planning to evaluate staffing needs by person and business line
Pipeline visibility to understand how sales activity could affect future operations
Retainer planning to help new clients and projects start with stronger cash flow
Gemsbok also worked with management to focus on obtaining retainers from new clients and projects, helping the business start new work from a more positive cash position.
The outcome
The forecasting model helped the client take a more proactive approach to business planning.
Leadership gained access to information that made it easier to understand cash needs, evaluate staffing decisions, and plan around the expected pipeline. Instead of reacting to cash flow pressure after it happened, management could see potential needs in advance and make decisions with more confidence.
Since implementing the model, the client has not experienced the same cash flow issues and has increased cash reserves by 155%.