This small Wholesale business imported goods from China and distributed across Australia and internationally. Business had been stable for a number of years but recent investment in new product development meant cash was beginning to drop with no clear picture of when it would be a problem or how to arrest the decline.
We conducted a Cash Management Review which showed some clear short and long-term improvements should be made in:
- More frequent utilisation of Supplier Financing facilities offered by large customers, resulting in daily availability of cash;
- Improved Debtor Management processes including automated systems for customer reminders and monthly statements, resulting in an improvement in payment days of smaller customers by 10%;
- Implementation of weekly 12-week Cash Forecasting, which drove better decision-making about project investment decisions.
Result: The business was able to plan the timing of several major business improvement projects to minimise pressure on cash reserves. This helped position the business well for an unexpected Business Interruption event affecting supply chain around Lunar New Year.