Cash Flow Optimisation for a Manufacturing Company
Introduction
When Josef was engaged, the company’s leadership had one pressing question: “Where has all our cash gone?” Despite supplying blue-chip clients such as Unilever, Mars Group, and Premier Foods, the business was struggling with cash flow. The problem? Large customers had extended their payment terms to 60+ days, significantly delaying cash inflows. Additionally, the company lacked structured invoicing and credit control procedures, creating further financial strain. Without immediate action, working capital would continue to be stretched, restricting growth and increasing financial risk.
Situation
Although the company had a strong pipeline of work with major clients, weak cash flow management left it unable to meet its financial obligations efficiently. The combination of slow invoicing cycles, poor credit control, and unfavourable customer payment terms meant that revenue was being earned but not being converted into cash quickly enough. This created unnecessary financial pressure and an over-reliance on short-term borrowing.
Obstacles
- Longer payment terms (60+ days) imposed by large corporate customers, restricting cash inflows.
- Invoices were only raised at month-end, creating unnecessary delays in receiving payments.
- No structured credit control procedures to track and chase outstanding debts effectively.
- Supplier payment terms were not optimised, putting additional strain on working capital.
Action
Josef designed and implemented a cash flow optimisation strategy to restore financial stability:
✔ Introduced stage payments for capital projects, ensuring cash inflows aligned with project progress and reducing the need for external financing.
✔ Shifted from month-end invoicing to daily invoicing, accelerating the payment cycle and reducing cash flow gaps.
✔ Established structured credit control procedures, improving debtor management and ensuring that outstanding payments were followed up consistently.
✔ Negotiated extended payment terms with suppliers, easing short-term cash flow pressure and aligning outflows with income.
✔ Implemented weekly cash flow forecasting, providing leadership with better financial visibility and control over cash management.
Result
✅ Within two months, the company had £250,000 in the bank.
✅ Cash flow concerns were eliminated, and the company no longer relied on an overdraft.
✅ The business transitioned from a state of financial strain to financial stability, with a structured approach to managing incoming and outgoing cash.
✅ The owner-director summed up the transformation:
“We brought Josef in because we needed a strong financial expert in the team. Two months later, we had £250k in the bank, no longer had cash flow worries, and no overdraft. We look forward to making good profits and putting some cash in the bank.”
Conclusion
By implementing disciplined cash flow management, optimised invoicing, and improved credit control, Josef transformed a business struggling with liquidity into a financially secure, cash-positive operation.
The changes went beyond just clearing short-term cash flow issues—they provided a solid foundation for long-term financial resilience. With cash flow now under control, the company could operate without the constant stress of liquidity shortages, enabling it to focus on profitability and strategic growth rather than firefighting financial crises.
Additionally, by improving forecasting and supplier payment management, the company gained a stronger negotiating position with both customers and suppliers. No longer reliant on reactive cash flow measures, the leadership team could now make proactive business decisions with confidence.
This transformation not only strengthened the company’s financial health but also empowered its leadership to seize new opportunities, plan for expansion, and invest in future growth—all without the worry of running out of cash. What was once a high-risk financial situation had been turned into a sustainable, growth-ready business.
