Unlocking $6.2M in Cash Without Slowing Growth

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Introduction

At the start of the year, the CEO’s mandate was bold and crystal clear:
Grow revenue by 15% — no additional headcount, no margin erosion. The Board was aligned, leadership bought in, and early results suggested the plan was working.

But by mid-year, the story changed.

Revenue was close to target, yet cash was tightening. Collections slowed. Inventory piled up. Suppliers kept asking for faster payments.

Internal reports painted these as “normal fluctuations.”

But when the CFO ran the company through Financial GPS — benchmarking against hundreds of industry peers — the real picture emerged:

Liquidity was eroding faster than revenue was growing. Without action, the business would face a $6.2M cash shortfall in Q4, forcing a credit facility draw and sending an unsettling signal to both the Board and the market.

The risk was clear:
Meet the growth target but lose strategic flexibility — or act now to avoid a year-end crunch.

The Challenge

Mid-year benchmarking revealed a widening gap between available and required working capital:

  • Receivables (DSO) had crept up by 9 days.
  • Inventory turns slowed due to supply chain bottlenecks.
  • Payables (DPO) shortened as vendors pushed for earlier payments.

The result? A looming $6.2M liquidity shortfall.

The CFO’s challenge: recover the cash without cutting growth initiatives or compromising service levels.

Methodology

Rather than relying solely on internal variance analysis, the CFO used Financial GPS to pinpoint peer-validated performance gaps. By blending the company’s internal data with industry benchmarks from over 800 sectors, the CFO could clearly see where working capital inefficiencies were hiding — and prove it to the CEO and Board.

Key findings:

  • Receivables: DSO was 6 days worse than top-quartile peers.
  • Inventory: Excess capital tied up in slow-moving SKUs.
  • Payables: Vendor terms lagged competitors, leaving leverage untapped.

This external validation turned what might have been opinion-based debates into evidence-driven decisions.

Discovery

The analysis exposed the “hidden drains” on liquidity:

  • Accounts Receivable: Lagging collections meant millions locked in unpaid invoices.
  • Inventory: Slower turnover compared to best-in-class competitors revealed overstocking and inefficient demand planning.
  • Payables: Opportunities to safely extend supplier terms by several days without hurting relationships.

By overlaying internal KPIs with peer benchmarks, the CFO could identify exactly where and why the gaps existed — creating a targeted, credible improvement plan.

Action Plan

The CFO launched a benchmark-informed working capital playbook to unlock $6.2M without slowing growth:

1. Receivables Acceleration

    • Targeted high-impact accounts over 45 days past due.
    • Added automated reminders & adjusted terms for slow payers.
    • Partnered with Sales to embed stronger payment terms in contracts.

    2. Inventory Optimization

    • Segmented SKUs by turnover speed & profitability.
    • Negotiated vendor buy-backs & implemented just-in-time ordering.
    • Aligned production schedules with actual demand.

    3. Payables Alignment

    • Benchmarked terms against top-quartile peers.
    • Negotiated 3–5 day extensions with key suppliers.
    • Introduced staggered payment cycles.

    4. Cash Conversion Cycle (CCC) Monitoring

    • Shifted CCC tracking from monthly to weekly.
    • Established early-warning triggers.
    • Integrated CCC targets into cross-functional planning.

    5. Scenario-Based Liquidity Planning

    • Modeled improvement paths & operational impacts.
    • Selected the least disruptive option to hit the $6.2M goal.e $6.2M goal.

    Outcome

    Within 90 days, the results spoke for themselves:

    • $6.2M cash unlocked — no cuts to growth initiatives.
    • DSO reduced by 6 days, accelerating cash inflows.
    • Inventory turns up 1.1, while maintaining 98% fulfillment.
    • DPO extended by 3 days without supplier friction.
    • CCC shortened by 10 days, boosting liquidity agility.

    Avoided credit facility draw, preserving borrowing power for strategic moves.

    CFO credibility strengthened with the Board through peer-benchmarked wins.quidity crunch — it built a repeatable playbook for funding growth with its own balance sheet.

    Takeaway

    Liquidity risk hides in plain sight — until it’s too late. This CFO didn’t wait for a crisis. By using Financial GPS to identify where performance lagged the best in the industry, they turned a looming shortfall into a competitive advantage.

    Conclusion

    Liquidity isn’t just a finance metric — it’s strategic fuel.
    When you can see your position in the context of industry leaders, you can act earlier, move faster, and protect your growth plans.

    Don’t wait for the warning signs to become boardroom emergencies.
    See how your working capital stacks up — request your Financial GPS Benchmark Report today and turn potential shortfalls into strategic wins.

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