The CFO Playbook: Managing Cash Flow in High-Growth Businesses

Across 2025, our Spotlight Interview series takes a deep dive into the modern CFO.

No longer just a financial steward, the CFO is viewed as a strategic partner deeply embedded in all facets of the business. Over the next 12 episodes, The CFO Playbook will uncover the skills, insights, and leadership approaches to serve as a gateway to understanding the multifaceted role of the CFO and how they contribute to organisational success.

For episode 2, we met with Jonathan Allard to chat through his thoughts around managing cash flow in high-growth businesses. [7 minute read]

David Waddell (DW): Jonathan, thanks for your time in joining us today. Would you mind starting us off with a brief overview of your career to date?

Jonathan Allard (JA): Firstly, thanks for asking me to participate in this series; I’m delighted to help. With a 20-year career within the dynamic and fast-moving Advertising and Media industry, and more recently, through my consultancy business, Clock Tower Consultancy, I’ve encountered numerous situations in SME high-growth businesses where the finance health checks I routinely perform highlight cash as one of the most challenging areas for management and one where improvements can always be made.

Well, I’d say that makes you more than qualified to talk us through this business-critical topic. Let’s get straight to it. In your opinion, what are the biggest cash flow challenges that high-growth businesses typically face?

JA: As we know, high-growth businesses scale quickly, and this rapid growth creates pressures on both cash inflows and outflows. The obvious consequence of not managing these cash flows effectively is, of course, subsequent cash flow challenges. It’s essential that management watch out for some early signs and act quickly to prevent bumps in the road from becoming business-limiting events.

Areas of inflows that need focus will be your receivables and inventory, countered by scaling challenges and potential capital expenditure demands, with the greatest challenge for finance professionals being to model and forecast these events so action plans can be implemented in advance.

In high-growth businesses, issues come quickly and will likely be more severe. Any credit extensions or delayed payments may create difficult cash flow situations. High-growth, product-based industries may need to invest heavily up front in inventory to meet demand, and that requires good liquidity management. Increasing operational costs as a business grows, including new hires or infrastructure, can require significant cash investment and will likely be a challenge, especially if not matched with revenue generation.

The importance of forecasting cannot be understated; overestimating revenue growth, an easy mistake to make for business owners in high-growth environments, can lead to overspend in inventory, staffing, or infrastructure, especially if expected revenue doesn’t materialise as quickly as anticipated. Pushing forward on capex, or underestimating working capital needs, can lead to unnecessary additional funding requirements that might have been avoided but for better planning.

In our situation of operating in the turbulent recruitment industry, we’ve certainly become well versed in balancing the management and the forecasting of cash flow. Staying abreast of it all is a fine art!

JA: Management needs to be alert to consistently overdue accounts or material disputes; they need to track metrics, such as DSO (Days Sales Outstanding), and be alert to declining profit margins, even while revenue grows, that may indicate costs are increasing faster than sales. If a business needs to frequently rely on credit lines or is needing to take unplanned short-term loans, it’s a likely sign cash flow is not being appropriately managed and is perhaps not sustainable in the long term.

Truly understanding your business can give you an opportunity to correct course before a challenge becomes a crisis.

I couldn’t agree more. Keeping on top of your financial situation with clear communication is definitely the best way forward. We often talk about scenario planning, how can this be applied to ensure cash flow stability during growth phases?

JA: When confronted with cash flow challenges in operations, the need to build accurate and timely forecasts cannot be understated. These should not only present future forecasts but should also include scenario planning to ensure cash flow stability during growth phases. I’ve found strategic cash flow management particularly important during business expansions, where scenario planning can ensure cash flow stability and thus help the business prepare for uncertainties.

Scenario planning allows you to evaluate potential risks, such as economic downturns, changes in customer behaviour, supply chain disruptions, or price fluctuations. Given the current uncertainty in the world, trying to determine some form of order from chaos is so important. You won’t get the perfect answers, but getting partway there is better than nothing.

Mapping out different scenarios means you can develop strategies to mitigate negative impacts.

That all sounds too familiar, as most businesses would have experienced several, if not all, of those risks over recent years. In our case, permanent placements are often hired on a needs basis, making it almost impossible to forecast—whereas running an interim side to the business with recurring monthly fees certainly makes it somewhat easier.

JA: Indeed. Creating multiple cash flow projections, based on different business scenarios, helps a business understand the range of potential outcomes and aids planning for the best and worst cases. In an optimistic scenario, cash surpluses might enable reinvestment; a pessimistic scenario may require more conservative financial management. They might not reflect exactly what actually occurs, but being able to model different scenarios arms management with the ability to plan ahead and allows quick changes in direction.

Let me call my Head of Finance to make sure she reads this! Often a growth mindset naturally comes with an element of expenditure and investment, but in difficult trading times, how do you suggest finding the balance of potentially cutting costs with sustaining growth momentum?

JA: Balancing cost-cutting whilst continuing a growth momentum is a delicate balancing act that needs due care and attention. It’s extremely challenging.

The key is to prioritise, and that means having an in-depth knowledge of all the different demands on capital. This, in itself, can be a challenge in a high-growth entrepreneurial environment. It needs to be understood by all senior management what’s being prioritised and why, so there’s universal buy-in.

Cutting costs is important, but only in areas that will not negatively impact the top line. High ROI investments that grow revenue should be prioritised, and there might also be good business cases for scalable technologies that require upfront capital but will help reduce operational costs in the medium to long term.

During my career, I’ve found outsourcing non-core functions to be cost efficient, and it hasn’t been overly detrimental to the business, so this is a place to target if needs be. In the same manner, acting on any opportunities to streamline your operations, eliminating inefficiencies in processes, should enable staff to concentrate on revenue-generating activities. Review of vendor contracts with an aim to renegotiate pricing, extend payment terms to better reflect cash inflows, or build in volume discounts, should always be explored as a means to balance cash demands.

Again, relevant to our line of work, retention and recruitment are both essential for business success. But there is, of course, a risk with high-growth businesses where hiring on a scale might be required.

JA: As for cutting personnel, a growing business can easily over hire, ramping up costs prior to revenues (this tends to happen a lot in advertising agencies), especially in a period of strong client wins. Managing a lean operation is crucial; the need for good business processes and flexibility is important, particularly with non-recurring revenue streams and a lack of client stickiness. My advice is to only scale up when you have the infrastructure and operational capacity to support it. Over-expansion, without the necessary support systems in place, can lead to wasted resources and will likely hinder long-term growth

When talent is required, hire smart and hire efficiently; focus on talent that will drive further growth. I am a huge advocate of comprehensive time-monitoring systems and activity analysis. High-growth companies can very quickly become inefficient and bloated with poor recruitment practices. Versatile employees who can wear multiple hats, or flexible contractor resources, are often good solutions when cash is tight.

Sound advice indeed, Jonathan. We’re finding that clients are increasingly upskilling key roles, often seeking candidates with broader skill sets to support growth. Many also leverage contractors to free up internal teams for growth-focused projects, a highly effective strategy when executed well.

And just like that, our time is nearly done! Finally, what advice would you give CFOs of rapidly growing companies to maintain financial agility?

JA: CFOs of high-growth companies need to balance financial oversight with the flexibility to adapt to rapidly to changing circumstances. Maintaining financial agility, whilst ensuring cash flow, requires certain mindsets and decision-making.

Any rapidly growing company which truly understands its cash position will have a culture that understands the importance of financial forecasting and scenario modelling. Such a business will ultimately benefit from the ability to change course quickly to counter any imminent issues, be those changes in revenue projections, market conditions or operational expenses. Through scenario planning, CFOs can determine the impact of potential cash flow risks and prepare for unexpected challenges.

Just focusing on profitability is a mistake; staying vigilant with regard to cash flow is important. Monitoring cash flow metrics closely is essential to ensure the company is not growing at the expense of liquidity.

Practical actions to enhance financial agility would include maintaining an accessible cash reserve in order to fend off volatility and to provide the flexibility to grasp growth opportunities should they arise. Being able to pivot quickly to take advantage of new opportunities or deal with unforeseen expenses is always a good idea, but if that is not possible, maintaining good relationships with banks, investors and venture capitalists is important so you can quickly secure external funding. By planning ahead, CFOs can avoid financial bottlenecks during critical growth phases.

Thanks, Jonathan, that’s some very sound advice to finish on and certainly some key points throughout our conversation, which I’m sure will resonate with our audience.

May 2025

—

Did you miss the first installment of the CFO Playbook? Click here to read a conversation with CFO James Sweeney on Navigating Economic Uncertainty.

If you’re a CFO and would like to take part in The CFO Playbook Spotlight Interview Series, then please reach out to David Waddell, MD, at Harvey John.