Liquidity Rescue & 6-Month Cash Recovery Model
A management case study showing how a recurring cash deficit was decomposed into project deductions, direct operating costs, corporate cash commitments, debt service and pricing exposure — then converted into quantified recovery scenarios.
1. Executive diagnosis
The problem was not simply “high expenses.” The model showed a measurable break-even gap driven primarily by deductions, with additional pressure from fixed cash commitments and weak pricing discipline.
Deduction leakage
Current deduction rate versus a calculated break-even ceiling of 12.84%.
Break-even gap
Current deductions exceed the break-even deduction limit by approximately SAR 188,996 per month.
Risk concentration
Four projects — 1002, 1008, 1009 and 1010 — generate SAR 346k of the SAR 356k total deductions.
Pricing exposure
Monthly labor underpricing exposure identified in two workforce categories. Treated as a separate diagnostic to avoid double-counting in the cash model.
The cash equation
Monthly billings of SAR 1,300,204 had to absorb SAR 575,700 of listed direct project costs, SAR 208,000 of operating/admin commitments, SAR 156,500 of debt service and SAR 193,000 of VAT. This leaves only SAR 167,004 of affordable deductions before cash flow turns negative.
Excess above break-even: SAR 188,996
2. Project-level risk concentration
The anonymized project table makes the source of leakage visible. “Net contribution” means billing less deductions and the direct costs listed in the source model; it is not the company’s final accounting profit.
| Project | Billing (SAR) | Deductions | Deduction % | Listed Direct Costs | Net Contribution | Risk |
|---|---|---|---|---|---|---|
| Project 1001 | 66,010 | 10,000 | 15.1% | 26,367 | 29,643 | Watch |
| Project 1002 | 44,855 | 27,000 | 60.2% | 15,567 | 2,288 | Critical |
| Project 1003 | 57,259 | 0 | 0.0% | 26,167 | 31,093 | Controlled |
| Project 1004 | 47,880 | 0 | 0.0% | 4,667 | 43,213 | Controlled |
| Project 1005 | 52,055 | 0 | 0.0% | 7,367 | 44,688 | Controlled |
| Project 1006 | 44,176 | 0 | 0.0% | 16,467 | 27,709 | Controlled |
| Project 1007 | 22,222 | 0 | 0.0% | 10,667 | 11,556 | Controlled |
| Project 1008 | 252,220 | 80,000 | 31.7% | 123,467 | 48,754 | Critical |
| Project 1009 | 205,122 | 99,000 | 48.3% | 100,467 | 5,656 | Critical |
| Project 1010 | 280,000 | 140,000 | 50.0% | 121,167 | 18,834 | Critical |
| Project 1011 | 133,582 | 0 | 0.0% | 62,667 | 70,916 | Controlled |
| Project 1012 | 94,822 | 0 | 0.0% | 60,667 | 34,155 | Controlled |
3. Where the non-project cash burden sits
The monthly cash model also separated project economics from corporate commitments so management could distinguish structural costs from project-specific leakage.
Operating & administrative commitments · SAR 208k/month
Head office 90.5k · residency/passports 62.5k · GOSI 10k · fines 10k · fuel 15k · leave/travel 10k · vehicle/equipment maintenance 10k.
Financing & statutory cash · SAR 349.5k/month
Debt service 156.5k plus monthly VAT cash requirement of 193k. VAT was deliberately kept fixed in all scenarios rather than treated as an easy “saving.”
4. Rescue scenarios
Three scenarios were modeled over six months. The recovery cases do not assume revenue growth; they focus on controllable deduction reduction, operating savings and negotiated debt-service timing.
Current · No intervention
- Deductions remain 27.4%.
- No operating savings.
- No debt rescheduling.
- Monthly deficit remains about SAR 189k.
Realistic rescue
- Deductions step down 22% → 18% → 15%.
- Operating savings reach SAR 35k/month.
- SAR 30k/month debt relief from Month 3.
- Monthly cash turns positive in Month 3.
Strong rescue
- Deductions step down 18% → 12% → 10%.
- Operating savings reach SAR 50k/month.
- SAR 50k/month debt relief from Month 2.
- Monthly cash turns positive in Month 2.
5. Monthly cash-flow recovery
The table below shows the modeled monthly net cash flow under each path. These are scenario outputs, not claimed realized results.
| Month | Current | Realistic | Strong |
|---|---|---|---|
| Month 1 | -188,996 | -94,041 | -32,033 |
| Month 2 | -188,996 | -32,033 | 110,979 |
| Month 3 | -188,996 | 36,973 | 136,984 |
| Month 4 | -188,996 | 36,973 | 136,984 |
| Month 5 | -188,996 | 36,973 | 136,984 |
| Month 6 | -188,996 | 36,973 | 136,984 |
Realistic case improvement
Improvement in six-month cumulative cash versus doing nothing, moving from (SAR 1.134m) to approximately SAR 21.8k positive.
Strong case improvement
Improvement versus current path, producing modeled six-month cumulative liquidity of approximately SAR 626.9k.
6. Management actions behind the numbers
The value of the model is the action plan: each scenario has explicit operating and financial levers rather than a generic instruction to “reduce costs.”
Attack deductions where they are concentrated
Build project-by-project SLA root-cause plans for 1002, 1008, 1009 and 1010, which together represent SAR 346k of monthly deductions.
Set a hard liquidity threshold
Keep total deductions below the SAR 167k / 12.84% break-even ceiling. The practical recovery target is 15%, with 10% as the strong-case objective.
Deliver quantified overhead savings
Implement savings of SAR 35k/month in the realistic case and SAR 50k/month in the strong case, with named owners and weekly tracking.
Reschedule, do not “assume away,” debt service
Model only negotiated timing relief: SAR 30k/month from Month 3 or SAR 50k/month from Month 2. If negotiations fail, the shortfall must be replaced by further operational savings.
Correct bid pricing discipline
A separate pricing diagnostic identified SAR 183.6k/month of workforce underpricing exposure. Future bids require fully loaded labor, housing, equipment, support overhead, financing and risk.
Install a weekly cash-control cadence
Track deductions, collections, payroll, VAT, debt service and project contribution weekly, with escalation whenever forecast deductions move above the approved scenario path.
7. What this case demonstrates
Liquidity management
Translating accounting data into a forward cash-control model with explicit break-even thresholds.
Project accounting
Separating project-level deductions and direct cost contribution from corporate cash commitments.
Scenario modeling
Building realistic and strong recovery paths with quantified assumptions and timing.
Management decision support
Turning financial diagnosis into prioritized operational, commercial and financing actions.