In the highly competitive world of industrial manufacturing, businesses must constantly evolve their financial and strategic approach to stay profitable and sustainable. FlexoPress, a leading manufacturer of Flexo printing presses, plate-making machines, and solvent recovery systems, faced significant challenges in debt dependency, low sales conversion, and inefficient financial cycles. However, through a series of strategic shifts and with the assistance of fractional CFO services, the company successfully transformed its business model, improving profitability, financial efficiency, and team performance.
This transformation offers valuable insights for business owners looking to optimize their financial and operational strategies, especially those in manufacturing and capital-intensive industries. Here’s how FlexoPress navigated its challenges and turned its financials around within a year.
The Challenge: High Debt Dependency and Low Sales Conversion
Before implementing key strategic changes, FlexoPress struggled with a high dependency on debt and low sales conversion rates. Like many manufacturing businesses, working capital constraints meant they relied heavily on borrowed funds. However, without a strong cash flow strategy, debt utilization became a burden rather than a growth enabler.
Additionally, their sales structure was geographically divided, which led to inefficiencies in targeting the right customers. Instead of focusing on product-driven sales strategies, the team was structured based on regional markets, limiting their ability to cater to specific customer needs.
The Strategy: Financial and Sales Overhaul
To address these pain points, FlexoPress made three crucial strategic changes with the guidance of fractional CFO services:
- Shift in Customer Advance Policy
One of the major changes was revising the customer advance policy to secure more upfront payments. This move significantly improved cash flow, reducing the need to depend on short-term loans. By asking for higher advances, FlexoPress was able to fund operations without stretching its balance sheet. - Sales Team Restructuring: From Geography-Based to Product-Based
Previously, the sales team operated based on geographical regions, which limited their specialization. Recognizing the need for a more focused approach, the company restructured the team to be product-wise instead of location-based.
This shift meant that sales personnel became product experts, understanding the technical specifications, unique value propositions, and target customer profiles of each offering. As a result, conversion rates improved, and sales efforts became more strategic rather than generalized.
- New Sales Incentive Policy
Understanding that sales performance is directly tied to motivation, FlexoPress introduced a revised incentive structure to drive results. The new incentive scheme aligned rewards with revenue growth, customer acquisition, and timely collections, ensuring that sales teams were motivated to close deals effectively and quickly.
The Impact: A Financial and Operational Turnaround
The impact of these changes was both quantifiable and transformative. Within a year, FlexoPress witnessed dramatic improvements across key financial and operational metrics:
- Debt Utilization Dropped from ₹2.5 Cr to ₹0.4 Cr
- With better cash flow management, reliance on debt reduced significantly, improving financial health.
- DSO (Days Sales Outstanding) Reduced from 75 Days to 30 Days
- The improved advance payment structure and focused sales efforts led to faster receivables, improving liquidity.
- Revenue Growth from ₹11 Cr in FY 22-23 to ₹17 Cr in FY 23-24
- This represents a 54% increase in revenue, driven by improved sales structuring and targeted efforts.
- Profitability Turnaround: From an 8% Loss to a 10% Profit Before Tax (PBT)
- Better financial planning, reduced debt burden, and increased revenue led to a remarkable profit turnaround.
Beyond Numbers: Operational and Cultural Shifts
While financial metrics highlight success, equally important were the operational and cultural shifts within FlexoPress:
- Clearer Division of Roles and Responsibilities: With the restructuring of the sales team, internal clarity improved, reducing inefficiencies and role overlaps.
- Higher Employee Motivation: The revised incentive structure ensured that teams were driven by performance and growth, leading to a proactive approach in customer interactions.
- Adoption of a Product-Wise Growth Approach: Instead of treating sales as a broad function, each product category was given a distinct target market and pricing strategy, making the company more agile in responding to market needs.
Key Takeaways for Business Owners
For manufacturing businesses and other capital-intensive industries, FlexoPress’s turnaround holds valuable lessons:
- Financial Discipline is Key: Ensuring sustainable cash flow and reducing debt reliance should be a priority.
- Restructuring Can Unlock Efficiency: Moving from a geographic to a product-based sales model helped streamline operations and improve conversions.
- Incentives Drive Results: A well-structured incentive plan can significantly boost team performance and overall revenue growth.
- Customer Advances Strengthen Liquidity: Having a strong advance policy improves cash cycles and reduces dependency on external funding.
The Role of Strategic Business and Financial Management
At Contetra, we help businesses like FlexoPress optimize their financial strategies, improve cash flows, and restructure operations for sustainable growth by providing virtual CFO services. Whether it’s designing better incentive plans, restructuring sales teams, or reducing financial risk, strategic business and financial management can make a tangible difference.
If your business is facing similar challenges—high debt dependency, low sales conversion, or cash flow constraints—it might be time to rethink your approach. The right financial and operational strategies can help turn around your performance, just as it did for FlexoPress.
For expert guidance, explore our virtual CFO services in Mumbai and take the first step toward a financially resilient future.
