Slashing Debt Costs by 75% for Sustainable Growth
A professional services client experiencing rapid growth had attracted the attention of large, well-known corporations eager for her services. She needed to hire more staff to support her business expandion, but did not have a clear understanding of the costs or sufficient cash.
Forecasting for Sustainability
To help predict future financial needs, we developed detailed profit and loss and cash flow forecasts. This allowed us to determine the number of new employees required and other expenses necessary to support her growing client base. The next step was to secure the funds needed to cover these expenses.
Reducing the Cost of Debt
In her early years of business, before partnering with Momentum CFO, our client had to rely on high-interest loans from online lenders. Some of those loans came with rates as high as 31%. While debt can be a useful tool for financing growth, unfavorable loan terms and high payments can negatively impact cash flow and jeopardize a business’s stability.
Results of Our Strategic Planning
- Securing Affordable Financing: We leveraged our connections with lenders to help her obtain a new loan with an interest rate under 5%.
- Reducing Debt Costs: Next, she used the new loan to pay off the high-interest loans, reducing her cost of debt by over 75% and saving her five figures each month.
- Improving Cash Flow: Finally, with improved cash flow, she was able to hire the necessary staff to support sustainable business growth.
Achieving Sustainable Growth
By forecasting future needs and securing affordable financing, we enabled our client to effectively manage her professional services’ firm’s rapid growth. She now enjoys more stable cash flow and is well-equipped to continue expanding her business.
