Enhancing Financial Literacy to Drive Profitability and Cash Flow for a Global Fencing Manufacturer

Background

A leading company in the security fencing space with multi locational facilities and a good brand image, was facing major cashflow constraints and profitability challenges. Promoters were faced with a dilemma as to how long should they continue to keep investing without visibility of commensurate returns.

Observations and Approach

A manufacturing industry expert from CFOB worked with the management and following actions were taken:

Started sharing goals/targets and actual progress and achievement of the same with the entire leadership team on a periodic basis. Multiple sessions held with leadership teams as well as other support functions to explain the importance of Finance Metrics/ data-based decision making and information.

Identified fixed costs that were an investment for a significant higher expected revenues in future, which required rationalization basis realistic revenue forecast. This drove accountability to ensure that the expenses yielded desired results or were identified for rationalization.

Specific targets on project completion/invoicing plans were shared and monitored on a weekly basis – this led to an enhanced visibility on operations and hence financials of the company.

Improved cash flows through credit limit management, project execution and better co-ordination between sales, procurement and production teams, which were implemented and monitored.

Impact

Significant improvement within 6 months on key matrices - Sales growth, Fixed cost as a % of Sales, working capital [debtors and inventory days].  

A more vibrant and responsive organization with a collaborative approach, which has learnt to work and take decisions based on data and analysis.