How an Electrical Business Fixed a $144K Cash Leak
Introduction — Why Silent Cash Leaks Are More Dangerous Than Big Losses
When leaders think about financial risk, they often picture a major project gone wrong, a bad loan, or a big lawsuit. Those events are rare — and when they happen, everyone notices.
What’s more common, and often more dangerous, are the silent leaks: the small, recurring errors and inefficiencies that quietly drain money quarter after quarter. Unlike a dramatic one-time loss, these don’t trigger alarms. They just erode profitability in the background until liquidity is tight, payroll is stressful, and growth plans stall.
The frustrating part? These leaks almost never show up on the income statement. The P&L can look fine, while the bank account tells a very different story.
How Cash Leaks Emerge in Growing Companies
Cash doesn’t usually disappear all at once. It seeps out through cracks in processes, especially in areas like payables, receivables, and variance reviews.
Duplicate Vendor Payments
When there’s no clean purchase order system or vendor list, it’s easy to pay the same invoice twice. Each duplicate may be small, but over time the totals add up.
Slow Receivables Collections
Invoices that linger for 45–60 days or longer keep cash tied up with customers instead of available for operations. Without discipline in collections, companies effectively become unpaid lenders.
Missing Variance Reviews
Month-end should be a safety net for catching anomalies, but when variance reviews are skipped or superficial, duplicate charges and ghost expenses can stay hidden for months.
None of these issues is catastrophic on its own. Together, they can drain six figures or more each year.
Case Study — The $144K Per Quarter Cash Leak
One electrical and clean energy company we worked with looked profitable on paper but was constantly short on cash. Vendors were frustrated, payroll felt like a scramble, and leadership couldn’t explain the gap between margins and liquidity.
A closer look revealed:
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Duplicate vendor payments slipping through unnoticed
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Receivables aged 60+ days, with no structured follow-up
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No budget-to-actual or month-to-month variance reviews, allowing ghost charges to sit unchallenged
Individually, none of these issues looked devastating. Together, they added up to a $144,000 leak every quarter — more than half a million dollars annually.
The Fix — Building Systems That Protect Cash
The solution wasn’t dramatic. It was about putting systems in place to prevent silent leaks.
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Purchasing and Payables Discipline: We implemented a PO and AP approval process and cleaned the vendor list. This stopped duplicate charges before payments went out.
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Receivables Follow-Up System: We established an AR aging process, introduced automated reminders, and cut DSO from 72 to 46 days. Collections improved almost immediately.
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Variance Reviews: We added structured monthly reviews comparing both budget vs. actuals and month-to-month performance. This made anomalies visible and prevented ghost charges from living in the system.
Within 45 days, the leaks were closed.
The Results — From Leak to Liquidity
The change was immediate and measurable:
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$144,000 per quarter preserved — equal to $576,000 annually
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Cash stabilized, giving leadership confidence and control
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Vendor relationships improved, with timely payments replacing delays
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Payroll pressure eased, allowing management to focus on growth instead of firefighting
Most importantly, leadership could finally trust the numbers. The bank account and the P&L told the same story.
What Business Leaders Should Take Away
This case shows that financial health isn’t only about revenue growth or profitability on paper. It’s about protecting the cash you already earn.
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Don’t underestimate the impact of small, recurring inefficiencies.
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Build systems — not just headcount — to safeguard cash.
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Treat variance reviews as a strategic tool, not a routine checklist.
In a competitive industry, protecting liquidity can be the difference between growth that feels sustainable and growth that constantly feels like a crisis.
Conclusion — Protect the Cash You Already Earn
Cash leaks are one of the most common — and most overlooked — financial risks in business. They don’t appear in bold headlines, but they can quietly drain hundreds of thousands of dollars every year.
The good news? They’re fixable. With purchasing discipline, receivables follow-up, and consistent variance reviews, companies can close leaks and reclaim their profitability.
For this company, the payoff was clear: $576,000 recovered annually and cash flow restored.
The lesson: you don’t need to chase more projects to improve liquidity. You need to protect the cash you already earn.
👉 Want to find your silent leaks? Download my 5-step Cash Leak Audit CHECKLIST below or book a 30-minute review.
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