A $500MM manufacturing and retail company set an ambitious goal to reach $1 billion in revenue within three years. Recognizing the complexity of their industry, they reached out to Frazier & Deeter to provide expert guidance and lay the groundwork for sustainable growth.

Challenge

The company initially reached out to Frazier & Deeter (FD) to improve financial processes and refine their ERP systems. However, through deeper discussions, it became clear that the root cause of their challenges wasn’t just about systems; it was about working capital. The company was faced with a tight working capital situation, and the focus quickly shifted to understanding how their management of inventory, AR and AP was affecting their ability to fund operations. As the team began to ask critical questions, they uncovered areas of inefficiency that were directly limiting cash flow.

Key questions included:

• What is the level of visibility into available cash to fund operations at any given time?
• What are the processes driving AR, AP and inventory management?
• Are there inefficient uses of cash in these areas (too many days inventory on hand, low Days Payable Outstanding, etc.) that impair available working capital?

FD’s Approach

FD took a holistic approach, diving deep into the company’s operations to uncover insights that went beyond surface-level fixes. Our team collaborated closely with the CEO and CFO, understanding not just the numbers but the day-to-day realities and challenges of the business.

Revamping AR and AP Processes:

FD worked closely with the company to assess how payments were being managed, both from customers and to vendors. We discovered inefficiencies in customer payment terms and payment schedules with vendors that were restricting working capital. Our team then supported management in identifying high impact relationships to address to ensure smoother, more predictable cash flow.

Optimizing Inventory Management:

In what seemed like a straightforward area, FD’s deeper dive into inventory revealed that the company was holding far more inventory than necessary: months of stock, far above the optimal number of weeks and a high level of aged/obsolete inventory. FD also highlighted the impact the exorbitant number of SKU’s had on the inventory and sales planning processes. Our team worked across departments to align production schedules and financial planning with actual sales demand, helping to eliminate excess stock and improve cash conversion cycles.

Driving Digital Transformation:

FD uncovered a highly manual environment where employees spent countless hours entering data into spreadsheets. This inefficient process was not only time-consuming but also prone to errors. Our team worked with management to identify digital tools that would automate data collection, creating a more efficient workflow and allowing the company to make faster, data-driven decisions.

Outcome

• Optimized Cash Flow: By analyzing AR/AP processes and inventory management, FD provided immediate relief by improving working capital through better payment and collection terms and optimized inventory levels.
• Strategic Alignment: With production, financial planning and sales teams working in together on a unified set of tools, the company was able to identify areas of potential excess inventory before they could accumulate. They could now react timelier and forecast more accurately, ensuring that the right products were in stock at the right time.
• Scalable Solutions: FD didn’t just solve immediate problems, we delivered a scalable methodology and monitoring system that enabled the company to make smarter, data-driven decisions, enhancing long-term strategic planning.
• Operational Efficiency: Positioning the company to transition to digital tools to reduce manual labor, streamline data entry and minimize the risk of errors, resulting in improved operational efficiency.

As a result, the company is now in a stronger financial position, with better cash flow management, a more accurate view of inventory, and an improved ability to forecast and plan.

Next Steps

By taking a holistic approach, FD didn’t just address their immediate challenges, we helped set them up for long-term success. Our focus was on creating sustainable solutions that would support their growth trajectory. With the right systems and processes in place to manage working capital more effectively, the company is now better prepared for sustainable growth that can be maintained as they move forward.

Ready to improve your company’s working capital and drive sustainable growth? Contact us today to learn how FD can help support your long-term success.

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