Stories / Professional Services
Managing Partner: Debtor days 74 to 29, cash buffer built to 11 weeks
A profitable firm on paper with 74 days of debtor days and two months where payroll was genuinely in doubt.
- Client
- Managing Partner
- Industry
- Professional Services
- Size
- 31 people
- Timeframe
- 7 months
Anonymised at the client's request · figures verified · published with written permission
The situation
Fee income at a record high, and a bank balance that told an entirely different story every third Friday.
Invoices were raised at project completion — sometimes four months after work started — and chased by nobody in particular.
The partners looked at a monthly P&L. No one had ever looked forward at cash on a weekly basis.
What we did
- STEP 01
Built a thirteen-week cash forecast in a spreadsheet
Not a system, not a project. One sheet, updated every Friday in twenty minutes. It showed the payroll risk five weeks before it would have arrived.
- STEP 02
Changed when invoices were raised
Milestone billing at 40/40/20 replaced completion billing, plus 30% upfront on all new engagements. Applied to new work only, which made it non-negotiable rather than a renegotiation.
- STEP 03
Gave collections to one named person with a script
Contact at day 7 after invoice, not day 45 after silence. Politeness with a diary date attached collected £180k in the first quarter.
- STEP 04
Set a cash floor the partners couldn't draw below
Eight weeks of operating costs, ring-fenced, agreed in writing. Partner drawings became variable above that line and fixed below it.
The numbers
| Measure | Before | After |
|---|---|---|
| Debtor days | 74 | 29 |
| Cash buffer | 1.5 weeks | 11 weeks |
| Overdraft usage | £140k peak | £0 |
| Invoices raised within 7 days | 22% | 96% |
Measured over 7 months
What didn't go to plan
Two long-standing clients objected to upfront payment terms. One stayed after a conversation, one left owing £14k that took a solicitor's letter to recover.
In their words
“We were the most profitable we'd ever been in the month we nearly couldn't pay everyone. Nobody teaches you that those two things live in different places.”
Managing Partner · Professional Services
The lesson
Profit is an opinion. Cash is a fact, and it is the one that pays wages.