Cash flow is the lifeblood of any business, yet many companies struggle with liquidity due to inefficient procurement practices. In our previous discussion, we explored five key strategies to unlock cash stuck in procurement. But what happens when you actually put these strategies into action?
Let’s take a real-world example of PG Steels, a mid-sized manufacturing firm that turned its cash flow struggles into financial success with fractional CFO services.
Recap: The Five Key Strategies for Better Cash Flow
To enhance cash flow through procurement, businesses must:
- Manage inventory wisely.
- Negotiate better payment terms.
- Control purchase orders.
- Use early payment discounts strategically.
- Regularly review supplier contracts.
These principles may seem straightforward, but their impact is significant when properly executed. Let’s see how PG Steels applied them to transform its financial position.
PG Steels’ Cash Flow Challenge
Despite generating substantial revenue, PG Steels constantly faced cash shortages. The root causes? Overstocked inventory, rigid supplier terms, and an uncontrolled purchasing process. Recognizing these challenges, their financial team supported by CFO advisory services, implemented targeted procurement strategies, leading to measurable improvements.
The Transformation: Key Procurement Fixes
- Just-in-Time Inventory: By aligning purchases with actual demand, PG Steels reduced excess stock and freed up $500,000 previously tied in overstock.
- Supplier Payment Terms: The company negotiated an additional 30-day payment window, improving liquidity by 10%.
- Purchase Order Controls: Stricter approval processes for purchase orders cut unnecessary spending by 15%.
- Early Payment Discounts: Identifying and utilizing early payment discounts saved the company $20,000 annually.
- Contract Reviews: A comprehensive review of supplier contracts uncovered outdated terms, leading to renegotiations that saved an additional $50,000.
The Results: A Financial Turnaround
PG Steels’ success wasn’t just about following a checklist—it was about leveraging financial expertise, including fractional CFO services, to optimize procurement and enhance cash flow. The results speak for themselves:
- Increased working capital.
- More flexible supplier relationships.
- Significant cost savings.
- Enhanced financial stability and growth potential.
How Contetra Can Help
At Contetra, we specialize in helping businesses like PG Steels identify inefficiencies, streamline procurement, and unlock working capital for sustainable growth. Our virtual CFO services in Mumbai go beyond problem-solving—we partner with you to develop tailored financial strategies that align with your business objectives.
Whether you’re looking to improve procurement processes, boost cash flow, or enhance long-term financial planning, we’re here to support your journey to financial success.
Don’t let cash flow challenges hold your business back. Contact Contetra today to start transforming your financial operations.
