Profit is on the P&L. Cash is not in the bank.
That is a working capital problem — and in most industrial businesses, the cash is there. It is just trapped in inventory, receivables, and terms that have never been actively managed.
The EBITDA looks reasonable. Cash is tight. The board is asking why.
Banking facilities are creeping up. Working capital is growing faster than revenue.
The cash is there. It is tied up in inventory that has not been positioned to demand, receivables that have not been actively managed, and supplier terms that have never been renegotiated. It needs to be systematically released — by someone accountable for the outcome.
Ready to discuss the mandate?
Inventory in industrial businesses is typically managed for service reliability — correctly — but is rarely optimised for the trade-off between service levels and capital. Slow-moving and obsolete stock accumulates. Buffer levels are set historically and not reviewed against actual demand patterns.
Customer payment terms are often set historically and unevenly applied. Overdue accounts are managed reactively. The relationship between credit terms and customer profitability is rarely analysed. Tightening receivables management — without damaging customer relationships — is consistently one of the fastest sources of cash improvement.
Supplier payment terms in industrial businesses are frequently shorter than they need to be. Extending terms where commercially appropriate, and aligning payment timing with cash receipts, is a structural improvement that compounds over time.
Persistent working capital pressure despite reasonable EBITDA signals that the business is not managing its balance sheet operationally. It is often accompanied by increasing borrowings, pressure on banking covenants, or a board increasingly focused on cash conversion rather than P&L performance.
Related Mandates
Ready to discuss the mandate?
Clear read of stock by location, age, velocity and margin contribution. Slow-moving and obsolete lines identified. Reorder points and buffer levels set to actual demand data. Discipline implemented to maintain those levels ongoing.
Payment terms reviewed by customer segment. Overdue accounts identified and clear escalation processes implemented. Credit terms aligned with customer profitability and risk. Operational work — not just policy setting.
Supplier terms reviewed systematically. Extension implemented where commercially appropriate. Payment discipline maximised without damaging supplier relationships.
The structural fix is making working capital a managed metric — clear ownership, regular review, accountability built into the operating cadence. When working capital is on the management agenda weekly, it improves and stays improved.
Working capital improvement mandates in industrial businesses typically release 10–20% of the working capital base within 6–12 months. In a $50M revenue business carrying $10M in working capital, that is $1–2M in cash — released without asset sales, refinancing or equity injection.
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