From Ship-to-Shore Cash Flow: Accelerating Receivables for an Indian Defense-Maritime Innovator

1. Introduction / Overview 

Our client in this study is a leading defense technology and maritime solutions provider in India. The company designs and integrates a broad array of electronic sensors and processing systems for commercial maritime and government projects. The organization has participated in many significant defense and commercial projects. The firm has also delivered and commissioned state-of-the-art technology systems, including nationwide AIS networks, multi-site VATMS, and VSAT communication systems on 154 Indian Navy vessels.

 CFO Bridge aimed to push liquidity and optimize fiscal well-being through the strategic reduction of outstanding receivables, thereby cultivating an accelerated cash flow cycle. Our objective is to institute a robust collections management framework, proactively hitting potential challenges, thereby reinforcing the business’s fiscal resilience. This disciplined approach aims to ensure a sustained trajectory toward financial excellence, underpinned by vigilant receivables management and an unwavering commitment to mitigating risks. CFO Bridge seeks to position the manufacturer for enduring financial strength, navigating the intricacies of the economic landscape with acumen and precision.

 We also targeted  to streamline and accelerate financial reporting to management through the implementation of Power BI, a robust platform demanding meticulous attention to detail and time investment. This initiative seeks to empower leadership with timely, data-driven insights, enhancing decision-making precision and fostering a heightened financial acuity within the organization. 

2. Challenges faced by the organization before partnering with CFO Bridge 

a. The client faced a cash flow issue due to a substantial capital expenditure (capex) incurred before the onset of the COVID-19 pandemic. This expenditure was directed towards establishing a state-of-the-art green building office, equipped with all modern facilities. However, the unforeseen impact of COVID-19 disrupted the normal course of business, exacerbating the financial strain.

The client was having trouble with money coming in on time because customers were taking too long to pay. A big chunk of their available funds got tied up in unpaid bills, making it tough to cover everyday expenses and causing problems for the business. The delayed payments not only put a strain on their cash flow but also made it harder for them to keep things running smoothly. To get things back on track, they needed to speed up the process of getting paid and free up the money that was stuck in those unpaid bills, so they could get back to business as usual. 

b. The client faced challenges in promptly producing essential financial reports like Profit and Loss (P&L), receivables, and payables, including comparisons with past data. This timely information is crucial for making informed decisions, especially given the client's involvement in various government projects. There were difficulties in syncing these reports with the Enterprise Resource Planning (ERP) system, causing complications in data integration. Additionally, the need for real-time accuracy in data on any given day added another layer of complexity. Resolving these issues is essential to enhance the efficiency of the client's financial reporting, ensuring smoother operations in the dynamic landscape of government projects. 

3. CFO Bridge's Robust Approach / Solution 

a. Strategic Analysis of Overdue Accounts: 

Conducting a thorough examination of the company's accounts receivable aging report, we pinpointed the most critical overdue accounts. Crafting a targeted collection plan, our strategy was to target on these high-priority accounts. This plan encompassed systematic customer follow-ups, the dispatch of timely reminders and notifications, and the establishment of structured payment schedules. By prioritizing these overdue accounts, we aimed to expedite the inflow of cash and alleviate immediate financial strain. 

b. Collaborative Measures with the Business Team: 

Collaborating closely with the client's business team, we facilitated the implementation of crucial adjustments in the company's invoicing procedures and payment processes. This collaborative effort aimed to address root causes, enhancing the efficiency of financial transactions and preventing future delays in payments. By aligning financial practices with the evolving needs of the business, we worked towards establishing a more resilient and responsive financial framework.

c. Power BI Implementation Unleashes Dynamic Insights: 

We teamed up with the client's tech experts to make financial reporting quicker and more accurate using Power BI. We spent time carefully matching different sets of numbers to be precise. Slowly, we created dashboards that show live comparisons and charts. Even though it took a while, this process not only fixed the initial problems with reporting profit and loss, receivables, and payables but also gave us a cool tool for the management. Now they can make smart decisions with easy-to-understand charts and insights about the company's money matters 

 4. Business Deliverables to the Client 

a. Comprehensive Weekly Reporting: 

Regular provision of detailed reports encompassing Revenue, a comparative analysis of Budgeted vs. Actual Revenue, Collections with a focus on Budgeted vs. Actuals. Additionally, these reports will feature an actionable plan designed to address any variances identified during the analysis. Weekly reporting extends to encompass payouts, offering insights into allocation plans, collaboratively devised with the involvement of payables and treasury teams. 

b. Strategic Cash Flow Management: 

A dedicated focus on monitoring and managing the client's cash flow. This involves an in-depth understanding of inflows and outflows, enabling the development of strategies to optimize liquidity. Through consistent oversight, we aim to ensure the client's financial resilience and the ability to meet ongoing operational and strategic requirements.

 c. Project Analysis for Margins and Cash Flow: 

In-depth examination of upcoming tenders, specifically focusing on margins and cash flow implications. This proactive analysis aims to inform strategic decision-making and enhance financial preparedness.

 d. Operational Support: 

Providing support in various operational facets, including but not limited to Audit Closure, Internal Audit Review, and assistance in handling department notices. This broader operational assistance aims to ensure compliance, efficiency, and the seamless functioning of internal processes. This comprehensive approach not only provides a snapshot of financial performance but also establishes a proactive framework for addressing potential challenges and optimizing financial health. 

5. Metrics Achieved 

CFO Bridge's initiatives yielded significant metrics in financial transformation as stated below

6. Conclusion

 CFO Bridge has successfully demonstrated a comprehensive financial transformation through diligent initiatives. The provision of detailed weekly reports, spanning revenue, budget analysis, and strategic insights, reflects a commitment to transparency and actionable intelligence. Strategic cash flow management has been important, ensuring a resilient financial posture for meeting operational demands. The timely analysis of tenders demonstrates a proactive stance in enhancing financial preparedness. Additionally, operational support in areas like audit closure and internal audit review underscores a commitment to compliance and process efficiency. 

CFO Bridge's multifaceted approach not only illuminates financial performance but also lays the foundation for proactive problem-solving, affirming a trajectory toward sustained financial health and operational optimization. 

Embark on a transformative financial journey with CFO Bridge. Our proven strategies in receivables management and Power BI integration empower your business for optimal cash flow and financial resilience. Let's collaboratively navigate the intricacies of your financial landscape, ensuring proactive decision-making and sustained operational excellence. Elevate your financial prowess with CFO Bridge – where precision meets performance, and success becomes a constant. Connect with us to redefine your financial narrative today. 

CFO Bridge is here to make ‘working capital’ working again