Chasing the White Knight

White knight is defined by Merriam-Webster as one who comes to the rescue of another. In business, fresh capital is too often assumed to be the white knight, and yet it is not. What you do with that capital is.

Chasing the white knight

A high proportion of our clients come to us having run out of cash or post a failed capital raising strategy, asking us to source cash for them. They tend to come to us as a last resort and assume their solution is more cash.

However what they actually need to be asking, is whether we can help them use the cash they have and any fresh capital (that we can help them raise), more effectively.

  • It is clear on an analysis of the statistics and based on our experience at Vantage, having cash does not equate to the skills and experience to manage cash well
  • If you are not disciplined with cash, you will run out of cash no matter how much you have
  • Financial insight is critical to managing cash well

We expand on each point below, illustrated by case studies.

The winning lottery ticket does not secure success

Search “lottery winners statistics go broke” and you’ll readily find the following:

  • US statistics show 70% of lottery winners end up broke and a third go on to declare bankruptcy, according to the National Endowment for Financial Education, Nov 2021
  • Runaway spending, toxic investments and poor accounting can burn through a lucrative windfall in next to no time, Nov 2021
  • Lottery winners are more likely to declare bankruptcy within three to five years than the average American, Aug 2017
  • A former social worker who maintained her frugal lifestyle after winning the lottery, commented, “If you are not disciplined you will go broke. I don’t care how much money you have.” Aug 2017

That is, having cash does not equal cash management skills, invariably people do not have the requisite skills and do not obtain them.

What fascinates me, is that the behaviours we see in individual lottery winners mirrors that seen in the corporate arena.

Data from the US Bureau of Labour Statistics shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. [1]

Ran out of cash or failed to raise new capital was the number one reason given for business failure according to CB Insights, data analytics company, Aug 2021. [2]

White knight: managing cash well

If cash alone is not the white knight – if a cash raise solution is not the complete answer – then what is?

Invariably, the white knight that clients are actually after, is an understanding of the processes, systems and habits that will assist them to manage the cash they have, and the cash they need to raise, well. This must be the first priority.

This step will improve their prospects of raising additional capital at all or on terms that are not wholly grievous. Critically, this step will set them up to build a stronger more resilient business and avoid being a statistic.

For clients to benefit from this step – they need to seek advice with sufficient time and resources to do the work required.  Below are three case studies of our clients’ approach to cash and some common threads amongst them:

  • They all had in place, or put in place with our support, accurate and reliable rolling cash flow and P&L forecasts.
  • These documents were updated and stress tested regularly, and shared with the board at least monthly.
  • They all had, or put in place with our support, a clear growth strategy and where needed a clear contingency scale back plan in the event cash flow contracted.
  • They all took responsibility for preserving the cash they had in a disciplined and conscientious manner.

Company A:

  • Unable to pay creditors on time and concerned that cash was becoming low, Vantage was engaged to build a ‘business as usual’ 13 week rolling cash flow forecast. This provided the board and senior management visibility on how far existing cash would get them, and what the cash deficiency was, with no change.
  • Under the umbrella of safe harbour:
    • To the ‘business as usual’ cash flow, Vantage layered a number of working capital initiatives providing additional time to source funds.
    • Vantage facilitated a strategic workshop to align the board and senior management, and provide focus on initiatives to improve profitability.
    • Vantage built and stress tested a P&L forecast to support a capital raise, with an existing shareholder now confident in the enhanced visibility and strategic focus, providing the funds.

Company B:

  • A public holdco was established and funds raised to acquire a profitable business aligned with holdco’s strategic expansion vision. Additional capital was then raised to fund the strategic vision.
  • As a first step, when the company was flush with a new fund raise (not when the money was practically gone):
    • the board implemented a robust governance framework, and secured strong financial and sales (with technical intel) personnel;
    • monthly reporting to the board on a 12+ month rolling cash flow forecast and 3+ year profit and loss forecast (high and low case), was implemented.
  • That is, a highly disciplined approach to cash – to preserve and enhance – became engrained in the company’s culture from the outset.
  • The forecasts guided senior management and the board in its decision making, it being clear when the funds would run out if key project contracts were not secured. As that date loomed, the board engaged Vantage to ensure it met the safe harbour criteria and to ensure that its plans remained reasonable and realistic. A scale back contingency plan was devised that would produce a better outcome than liquidation in the event the contracts were not secured in time.
  • With continued delay, to preserve cash, the company commenced implementation of elements of the scale back initiative, but in a manner to protect reputation and the ability to scale up if the contracts were won.
  • In the weeks prior to a need to implement more drastic scale back initiatives, the contracts were secured, in turn securing a further capital raise and business viability.
  • The board and senior management would be described as cautiously bold – as opposed to carelessly bold – prudent cash management was the difference between success and failure.

Company C:

  • A company had a cash shortfall approaching – they approached Vantage to assist them. Although profitable, their cash flow forecast indicated they would run out of cash in 2-3 weeks and that a bridge loan of $1.5m was required.
  • Vantage recommended improvements to enhance the accuracy and reliability of the forecast, and assisted the client to profile certain working capital initiatives. This work reduced the need to $800k and provided the company additional time, 2 months, to source the funds.
  • Vantage assisted the client to source the funds, whilst providing weekly cash flow forecasting oversight. Under the umbrella of FastTrack, Vantage also conducted a strategy workshop and provided strategic advice.
  • Two months along, subject to certain agreed working capital initiatives, and having secured further additional contracts with a stronger strategic focus and a list of clear initiatives to strengthen profitability, the forecast indicated that the company was sufficiently cash accretive to avoid a capital raise altogether. The gap had been closed completely and forecast profitability was strong.
  • This was a company with a strong board, strong sales and technical expertise, with the humility to identify a need to enhance their financial visibility and strategic focus.

Financial insight is different to financial information

Financial insight is critical to managing cash well.

However, financial insight is different to having accurate financial information. Financial insight is the strategic use of financial information to make good business decisions.

It involves the strategic analysis of actuals to have a clear understanding of the business, what to keep doing, stop doing and change.

It involves the strategic use of a reliable forecast by testing the viability of cash flow and EBITDA under a number of scenarios. Standard scenarios include management’s case (which probably looks like the budget and tends to be aspirational), a base case (this is a sensitised assessment of what is reasonably likely to happen) and a worst case (this is a stress tested scenario, in the event certain material events on which the forecast is reliant do not occur at all or in the timeframe expected). Under each scenario, the board must be confident the company is viable or there is a contingency plan which could be implemented if required.

Next steps?

Safe Harbour and FastTrack are the frameworks that give companies the skills to manage cash well. We are experts in both, having recently made a submission [3] on proposed amendments to the safe harbour framework, in the context of an inquiry (by the Parliamentary Joint Committee on Corporations and Financial Services) into corporate insolvency in Australia [4].

The overwhelming majority of submissions to the inquiry agree that the safe harbour is working well, and that certain safe harbour changes recommended by former government be implemented urgently, particularly in the current economic environment. Those changes are discussed in our article titled “The Vantage View, Government’s Review of the Insolvent Trading Safe Harbour” . Most importantly, they include a recommendation strongly agitated by Vantage that the mandatory tax and employee compliance element of the framework must be simplified to refer to substantial (not technical) compliance.

The inquiry committee currently intends to table a report in both Houses of Parliament by 30 May 2023. Assuming the committee adopts the recommendations as submitted they should do, Vantage would hope to see Federal Government implement the safe harbour changes as a matter of urgency and this year.

If you would like further information about managing cash, Safe Harbour, FastTrack, sourcing Capital, working through complex business challenges or improving business performance, please contact us.


February 2023

This article is general in nature and is not to be taken as financial, legal or governance advice. You should consider seeking independent financial, legal or other advice to check how the information relates to your unique circumstances. Vantage Performance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly.


[1] Investopedia, Article Titled “Top 6 Reasons New Businesses Fail” 30 Dec 2022:,to%2015%20years%20or%20more.

[2] CB Insights, Article Titled “The Top 12 Reasons Start Ups Fail” 3 Aug 2021:

[3] Vantage is one of the most active safe harbour experts nationally. See submission number 10, Vantage Performance:


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