Case Study: Sales and Finance – Cash flow is King

Background

This is long established business operating in agriculture with deteriorating aged debtors as customers are mostly operating at a loss because of the drop in milk price. case study Helene Sewell EFM Finance Director Cashflow

The cash flow is getting stretched and there is a risk that old debt is going to become bad debt. The sales team have a long-standing relationship with their customers and do not want the finance team to chase customers for money they prefer to do it themselves. There is one person working part-time on credit control but she only chases the sales people, not the customers direct.

Challenge

Head office in the UK demands an improvement of the aged debtor across the EMEA region and the French business is one of the worst in the country so its target is to reduce debtor days from 140 to 115 in one year. There is a definite reluctance to get finance directly involved in collecting cash as there is a perceived risk to lose customers to the competition if pressure is put on them. The French team doesn’t see the value in being part of a UK group and has a history of doing their own things.

Solutions

3 parts to the solution

1. Built better understanding of finance and cash management to the sales team by delivering a bespoke training program. It showed the negatives consequences of poor cash flow on the supply of products hence affecting competitivity. It also helped to built trust with the sales team that finance where on the same side and not the sales prevention department.
2. Implemented an EMEA wide debt collection policy which gave joint responsibility between Sales and Finance to collect the debt and a clear route to escalate if Sales and Finance cannot agree on the action to take on individual cases.
3. Appointed a new professional credit controller

Benefits

• The debtors day target was met
• Cash improved by £1M
• The relationship with customers was reinforced rather than damaged as the payment issues were discussed and solutions found
• The French team started to see the added value brought by the UK team.

 

“As a former member of the European Management Team at Genus ABS EMEA, I have had the chance to work together with Hélène on various projects including updating our procedures with regards to budgeting, reporting, credit control and cost control. She also helped in the recruitment of key members of the finance/accounting team at the group’s French operations. As a marketing person, I particularly appreciated her willingness to understand the sales part of the business and her communication skills with the sales force. She brought a lot of structure to the European finance team and displayed decision-making and leadership skills as well as great team-work capabilities across borders and business areas”

Gilles Florid