We started with a 4-week diagnostic exercise to identify working capital release opportunities for the company. Conducting interviews with the management team of the company, we documented and analyzed the currently applicable frameworks for inventory management, production planning and vendor management, as well as the credit policy in place.

Our analysis uncovered issues with raw material purchases, highlighting many cases of unnecessary purchases. We also raised the need to revise and systematically monitor the credit policy framework, in parallel with renegotiating the payment terms with the company’s main suppliers, as 80% of new customers had payment terms more than 90 days, regardless of size, at a time when the main suppliers were paid within 30 days.

The 2nd phase of our work focused on implementation. In cooperation with management, during the next 6 weeks we introduced a credit policy framework, easy-to-understand by the sales department, fully integrated with the company’s pricing policy. At the same time, we introduced a set of Operational and Managerial Working Capital Performance Indicators, presented to all departments involved, in order to promote a holistic management mindset for liquidity.

* We take the confidentiality of our clients seriously. While we have changed their names, the results are real.