Turning the Tide: How Strategic Financial Management Revived an SME
Client Profile
A mid-sized manufacturing company, specializing in industrial components, faced challenges that threatened its business continuity. The company had a steady client base but struggled with cash flow management, affecting its operations and customer satisfaction.
Challenges
Profit Decline
The company experienced an 18% drop in profits due to rising input costs and sudden market fluctuations.
Delivery Inconsistencies
Poor cash flow management led to delays in delivery schedules, risking the loss of top clients.
Payment Delays
A 35% delay in payments from buyers was severely impacting liquidity, increasing debt dependency, and destabilizing operations.
Our Approach
To address these challenges, we conducted a comprehensive financial health assessment, pinpointing critical gaps in cash flow and credit management. Our tailored strategy included:
Dynamic Credit Risk Evaluation System
Implemented a real-time assessment tool to evaluate buyers' creditworthiness, reducing bad debts by 22%.
Trade Credit Insurance Policies
Secured receivables by introducing insurance policies that protected against buyer default, ensuring consistent cash flow.
Cash Flow Forecasting Tool
Designed a forecasting mechanism to identify high-risk periods, enabling proactive financial planning and resource allocation.
Dynamic Credit Risk Evaluation System
Implemented a real-time assessment tool to evaluate buyers' creditworthiness, reducing bad debts by 22%.
Trade Credit Insurance Policies
Secured receivables by introducing insurance policies that protected against buyer default, ensuring consistent cash flow.
Cash Flow Forecasting Tool
Designed a forecasting mechanism to identify high-risk periods, enabling proactive financial planning and resource allocation.
Results
The damage goods audit revealed significant opportunities for improvement:
Improved Operational Efficiency
On-time delivery rates increased by 27%, restoring client trust and satisfaction.
Profit Margin Growth
The company achieved a 12% increase in profit margins within 6 months.
Enhanced Financial Stability
Reduced dependency on debt and built a robust financial framework to handle future uncertainties.