Cashflow case study
Our client has a profitable business, dealing with high volume, low margin product which is subject to significant increases in raw material costs and extended supplier deadlines.
The owners understandably prioritise satisfying customer demand over reducing the cash tied up in stocks, meaning they need tight control of their cash flow.
We maintain a rolling cash flow forecast on their behalf, alerting them to problems that may arise and taking corrective action when necessary.
As an example, the business uses a factoring company as a valuable financing tool. The factoring company releases funds to the business based on the invoices raised, up to a pre - agreed limit. As the product had been subject to several months of almost double-digit price increases, the business was likely to exceed its agreed factoring facility. With increased suppliers bills to pay this would have led to a significant cash flow issue.
Our team alerted the business to the impending issue, and then spoke to the factoring company on their behalf to increase their factoring facility.
The business was delighted with our insight and swift action. They continue to rely on us to help them maintain a firm grip on their finances.