Small Medium Enterprise (SME)
(name withheld for confidentiality reasons)
This $50.0 million turnover SME supplying the building industry decided that, rather than letting their customers pay 70+ days on average after invoicing, they would ‘manage back’ customer payments.
Over a medium timeframe, they were able to reduce payment days to 35 days on average, giving them an extra $4.8 million ongoing cash benefit.
As a result, they were able to pay cash for machines rather than lease, and over time reinvest to grow from one Victorian based manufacturing site to fund multiple sites across Australia.
The quote from their CFO was simple:
Our new success came directly from focussing on managing our customer payments to the trading terms the customer had agreed to pay to.