The Tin Man's Oil Can: Small Financial Maintenance Prevents Big Repairs
It's a miserably cold and rainy November morning in northern New Jersey, the kind of gray day that calls for something warm. Thanks to my many surgeries, I have more metal in my body than the Tin Man, and on mornings like this my bones creak to prove it. So, to warm my bones, I made my first bowl of oatmeal of the season, with walnuts, craisins, a drizzle of maple syrup and a splash of half-and-half, and I thought about the Tin Man.
He got caught in the rain and rusted solid in the middle of a swing of his axe. He didn't need a new body or a rescue team. He needed someone to find his oil can.
Businesses rust the same way. It rarely happens in one dramatic failure. It happens through small routines nobody keeps up, until the company can't move.
Where the Rust Starts
Rust always starts in the same quiet places:
The month-end close slips. Five days become fifteen, then "we'll catch up next quarter."
Reconciliations go unfinished. Bank, credit card and intercompany accounts sit unreconciled, and small differences turn into mysteries.
Receivables age without anyone noticing. A customer who pays in 45 days drifts to 75, and the cash gap shows up on payroll day.
The cash forecast lives in the founder's head. It works until it doesn't.
Contract and covenant dates are forgotten. A loan covenant test or a renewal notice shows up as a surprise.
None of these is a crisis by itself. Together they're how a healthy company ends up standing frozen in the forest.
The Oil Can
The good news is that oil is cheap. The routines that keep a business moving aren't complicated:
Close the books on a schedule. Choose a close date and keep it every month.
Reconcile everything that holds cash. If it holds money, it gets reconciled monthly.
Run a rolling 13-week cash forecast. Update it weekly. It's the single best early warning you can have.
Review receivables aging every month. Call slow-paying customers before they become past-due problems.
Run your payable too. Make sure you’re not paying your bills faster than you’re collecting your receivables
Keep a compliance calendar. List covenants, tax deadlines, insurance renewals and contract notices in one place, with an owner for each.
Maintenance Is Cheaper Than a Rescue
When the Tin Man finally got oiled, he could move again, and then he went off to look for a heart. That's the point of financial maintenance. Clean books and a reliable cash forecast don't make a company exciting. They free the leadership team to work on what matters, such as strategy, growth, people and the next opportunity.
If your financial routines have started to creak, it may be time for some oil. That's much of what a fractional CFO does: keep the joints moving so the company can keep walking down the yellow brick road.
