Finance
Revenue was growing at double digits, yet every month was a scramble to pay suppliers. Four months to put cash flow back under control.
−38 daysCash conversion cycle
OVERVIEW
CONTEXT
The executive team looked at the P&L and saw a good year. The chief accountant looked at the bank balance and saw a very tight one.
The company had launched two new product lines in eighteen months and taken on large customers with 60–90-day payment terms, while raw materials still had to be paid up front. That gap never showed up on the P&L — it showed up in short-term borrowing that rose every quarter.
No one in the company owned the cash conversion cycle. Purchasing optimized price, sales optimized volume, the warehouse optimized availability — every department did its job well, and together they pushed working capital ever higher.
SOLUTION
Rebuilding every cash inflow and outflow week by week — far enough ahead to make decisions, close enough to verify.
Separating inventory, receivables and payables to see exactly where the money is tied up.
Payment terms linked to margin and payment history, instead of one rule for everyone.
The cash conversion cycle became an owned KPI on the executive team's scorecard.
Grouping items by turnover speed and setting a stock ceiling for each group rather than for the whole warehouse.
Thirty minutes a week with exactly four people, around a single set of numbers.
All purchasing, sales and inventory data was pulled into a single table. For the first time, the executive team could see how many days of capital sat in inventory, how many in receivables and how many were financed by suppliers. No conclusions were drawn at this stage — only reconciliation, until all three departments agreed the numbers were right.
The new credit policy was rolled out group by group, starting with the lowest-margin customers. Inventory limits were set for each product line and built into the purchasing process. The weekly cash meeting became the place where decisions were made, not where past events were reported.
WHAT'S DIFFERENT
Not a thicker financial plan, but an operating rhythm the business can keep on its own after the advisor leaves.
Every number was built and defended by the internal team; the advisor only asked questions.
Accounting, sales and production share one source — no more two versions of the report.
Credit terms were tightened gradually by customer group, avoiding a revenue shock in the transition quarter.
The weekly cash meeting kept running after the project closed.
RESULTS
We never lacked reports. What we lacked was one right question, asked every week until the whole company could answer it.
Four months for the first phase: one month to rebuild the numbers, three months to change how the business operates. Most of the time goes into aligning numbers across departments, not into analysis.
A project lead on the company side with decision-making authority, plus representatives from accounting, purchasing, sales and the warehouse. No new hires are needed for the project.
No. The first phase runs on the systems the business already uses. Upgrading software only comes up once processes are stable and it is clear what data is needed.
The metrics and the meeting rhythm are handed over to the CFO. The advisor joins a quarterly review during the first year.
A NEW JOURNEY STARTS HERE
A thirty-minute conversation is usually enough to name the bottleneck. The rest is designing a roadmap that fits your size and resources.
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