A UK manufacturing company with sales in a number of locations in Europe, US and the Middle East was finding that an increasing proportion of its cash was being tied up in receivables. PMC was engaged to assess cash management practices.
- Conduct a fact-finding exercise to understand the current environment, specifically why cash was being tied up in receivables and identify specific areas for improvement;
- Led initiatives (identified during the fact finding phase) to improve performance reporting, instill “cash awareness”, and improve credit control processes in areas such as billing accuracy, credit note issuance and cash conversion;
- Define appropriate cash pooling and cash forecasting approaches and develop cash focused KPIs for local management.
Results & Recommendations
Our review helped determine that DSO (Day Sales Outstanding) was high and reducing it released GBP 20m – 30m of cash. Management was also shown that cash consciousness within the group was not high, reporting arrangements were weak and the credit control function was not operating effectively or in coordination with other parts of the business. Addressing these points enabled the business to tighten both controls and cash management efficiency.