by minimising cash spending what do you mean

Great question. You might be wondering "Why minimize cash spending specifically? Isn't that basically the same as minimizing costs?"

Not always, and this distinction matters (especially during a liquidity crisis).

Some costs don't drain cash immediately. Think of machinery or equipment: it shows up as a cost through amortization, spread over years, but the cash may have already left long ago. Similarly, some costs are billed once at year-end, or are fixed commitments you simply can't cancel mid-crisis, so even if you wanted to stop them, you couldn't free up cash in the short term.

What we actually care about here are the costs that drain cash right now. Three basic examples:

• Raw materials: if you run a truck delivery company and you can't pay for fuel, operations stop today
• Salaries: whether you own a restaurant or a factory, payroll keeps running regardless of revenue
• Labor-intensive Services: your corporate canteen, external workers, office cleaning services, etc follow a similar pattern

These are the levers. That's where the focus goes.

P.S. One thing worth noting: this level of nuance (distinguishing between cash outflows and accounting costs) is frankly quite advanced for an entry-level role like a McKinsey BA. You'd more typically hear it from an Associate or Experienced Hire. But if you can bring this distinction into an interview naturally, it signals serious business maturity!

It means reducing the cash outflows of the business.

Practically, it refers to minimizing both the opex (e.g. marketing, salaries, rent, suppliers, ...) and the capex: (i.e. investments)

So it’s not just “cutting costs” but managing real cash outflows to preserve liquidity.

Best,
Franco

What a great question to ask your case interviewer! Remember, you're allowed to clarify in a case. To be clear: I have an interpretation of that, but it might change per business case, etc. So I ALWAYS clarify.

For more on handling ambiguity and driving cases forward, my case interview course covers this end to end.

Franco, spot on with that explanation.

The key distinction you highlight – between just "cutting costs" and actively managing cash outflows – is fundamental. As consultants, we often see companies get tripped up focusing purely on P&L expenses. The real leverage for preserving liquidity often comes from deeply understanding and optimizing the cash conversion cycle, including working capital elements like inventory, receivables, and payables, alongside disciplined capital allocation. These levers don't always hit the P&L as "cost cuts" but have immediate, tangible impacts on cash reserves and overall financial health.

Understanding this allows us to move beyond simple cost-cutting exercises and into more strategic discussions around cash runway and funding options, which is a much more powerful conversation to have with a client during challenging times.

Great articulation!

There is a fundamental difference between accrual accounting view and cash accounting view. 

Metrics like EBITDA or Net Income do typically not reflect cash situations properly. Many "expenses" or "incomes" are purely accounting-based (e.g. depreciation, capitalized lease expenses). 

Cash is king, hence, focus on free cash flow of a company. Cash expenses, net working capital, capital expenditures, investments...

It means reducing actual money going out of the business, not just accounting costs.

Some costs show up on a P&L but don't involve real cash. Depreciation is the classic example. Minimising cash spending ignores those and focuses only on real outflows: salaries, rent, supplier payments, capex.

It usually comes up in turnaround or cash crunch cases where the client needs to survive short term, not just improve margins.

Hi there,

It means minimizing any expenses, whether it be operational or capex.

Khadija, 

Brief piece of advice - if you have this sort of situation in the interview, i.e., you don't know what a term means, don't hesitate to ask. It's absolutely ok. In fact, proactively clarifying it will make your life easier later when solving the calculations. 

Best,
Cristian