A large family run business (200+ employees) in the construction industry was having cash flow and profitability issues, despite increasing sales/revenue.
A highly competitive market place characterised by market consolidators who contracted work out to the lowest bidder, was pushing prices down and forcing loss leading pricing that was unsustainable.
Working closely with GPI, the client was able to create and execute a plan which included the following actions;
* Wind down stock levels
* Encouraging suppliers to hold onto stock and extend payment terms in return for sole supply
* Identify and remove significant overhead reductions
* Institute stronger contract controls around variation management and cash collection. Focus on bringing cash in on time and within terms.
* Institute better systems and documentation to enable measurement of work in progress and work in the pipeline to enable more effective business planning
As a result of these activities, the client achieved the following successful outcomes;
* Improved business viability and profitability
* Removed 25% of company overheads without impacting service delivery
* Cash collections reduced from 120 days to 60 days significantly improving cash flow
* Increased approved variations from approx 50% to 90%