Case Study on Fractional CFO

The Situation

Rajat built his precision engineering unit from the ground up. In three years his order book grew from around ₹4 crore to nearly ₹14 crore. Yet the business was persistently short of cash: the bank limit was fully drawn, supplier payments were slipping, and he was considering a high-cost informal loan to fund a large new order. His statutory books and GST were in order, but one question went unanswered — if the business was profitable, why was there never any money?

What a fractional CFO actually does

Rajat did not need, and could not justify, a full-time CFO. What he needed was a senior finance professional working above the bookkeeping to turn numbers into decisions — a role we took on part-time, on a fixed monthly fee.

What we found

• Classic overtrading. The business was growing faster than its cash could support, with profit trapped in receivables and stock.
• No cash-flow forecast. Shortfalls appeared without warning, usually on payday.
• A major customer was being financed by Rajat, paying in over 90 days while he paid wages and suppliers monthly.
• No costing system. He could not say which products, jobs or customers actually made money.
• Pricing ignored the cost of delay, so some jobs barely broke even and a few lost money once fully costed.
• Inventory and work-in-progress were tying up further cash on the shop floor.
• He was leaning on costly informal borrowing, with the bank limit fully used and the cost of funds rising.
• Personal and business funds were mixed, obscuring the true cash position.
• There was no MIS, budget or breakeven view — the business ran on instinct and the bank balance.

What we did

• Built a 13-week rolling cash-flow forecast to give advance visibility of shortfalls.
• Introduced proper job and product costing — repriced underpriced work and declined jobs that lost money.
• Tightened receivables with clear credit terms, a follow-up process and renegotiated terms for the slow-paying customer.
• Began restructuring the banking to replace costly informal borrowing with an appropriately sized working-capital facility.
• Separated the owner’s remuneration from business cash for a clean view of performance.
• Established a monthly review, budget and dashboard covering cash, margin and receivables.

The Result

• The forecast has ended the routine cash firefighting, giving several weeks of visibility.
• Repricing and exiting loss-making work are beginning to improve margins.
• The banking restructure is in progress, with a lower cost of funds expected on completion.
• The large order has been accepted on advance and staged payments, after a proper review of the numbers.
• With finance under control, attention is now turning to a measured, planned expansion.

The Takeaway

Most growing businesses do not fail for want of profit; they fail when they run out of cash while growing. A fractional CFO provides senior financial judgment — forecasting, costing, banking and clear decisions — without a full-time salary. A business need not be large to require the thinking of one.

If your business is growing but the bank balance does not reflect it, that gap is usually addressable with the right financial discipline.

Some names and identifying details in this case study have been changed to protect client confidentiality.