How Pauline has helped a wide range of businesses with their financial planning as a CFO, FD or advisor.
Importing Issues in a Growing Company
How Pauline helped to rationalise the company’s operations infrastructure
One of my clients is a family business spanning two generations. They were successfully importing and distributing toddler toys but knew that they could do more.
The business purchased manufactured goods from the UK and overseas to sell in the UK, Netherlands and France. They also had a large market in Spain and were looking to expand into other emerging markets with interest in Latin America as their products were already packaged in Spanish.
They didn’t know whether to invest in their warehousing and logistics or outsource those departments. With my help they relocated 60% of their business to the Netherlands ahead of Brexit to try and match their European market demand. They retained the rest of the business in the UK as it was manageable for the key team and it provided in-house sample checks to ensure consistent quality from the overseas suppliers.
They asked me to support them with their financing application and supply chain strategy as their business had rapidly grown in the last two years.
I led on reviews of alternative suppliers of toys in the UK and Asia; Bill of Material (BOM) costs, quality control, certifications, minimum order quantities (MOQs), lead-time, their returns policy and testimonials from existing customers.
I had travelled extensively to China on past assignments and built up a large network in-country and supplier relationships. The company now purchases from contacts I provided them with in China as well as the UK and Spain.
I also organised their Foreign Exchange (FX) purchasing to minimise costs and ensure the best Foreign Exchange rates were used rather than only utilising on the spot purchase rates from their bank.
Their inbound freight was causing the company issues because they were waiting for their suppliers to completely fill a container before shipping it. I instigated shared inbound freight (less than container load). This freed up cash within the company as they could pay for their stock as and when required which meant there was less capital tied up in purchasing lines. It also enabled the company to operate on more of a Just in Time (JIT) basis which reduced the amount of time that their clients had to wait for orders to be fulfilled. It also meant that their logistics hub had a steadier workflow rather than an all or nothing situation.
I introduced the company to my contacts in South America for a possible new market for their toys. The initial consultation lasted for several months on a part-time basis and there’s on-going support regarding the new markets.
Recommended by the Bank
Pauline gives professional advice to a company that wants to expand
Another of my clients was a UK manufacturing business making their own outdoor clothing for UK and Europe.
They were looking to grow and expand and their bank suggested part time support from a CFO for their next phase of growth plans. This was going to be essential to further support their loan application.
I initially undertook a financial health check of the business before moving onto business growth plans and forecast modelling.
The modelling provided tools for decision making of whether a second site would be acquire or expansion of the existing site for the growth plans.
I created the necessary forecasting and people planning of their workforce, alongside their HR management team, so that the company could employ additional staff in a focussed and effective way.
I will continue with part-time CFO support for them, working two days a month for the following months to support with expansion plans and mentor the in-house finance team.
Gym Equipment made in the UK
How Pauline helped the company to see its way forward, enhancing customer satisfaction whilst improving profits
I was asked to review a company that manufactures gym equipment in the UK with a focus on reducing their in-house overhead costs. They also were questioning whether they should they continue to manufacture in-house or buy out when purchasing their equipment?
Their products, when made in Britain, were at an 20% cost increase as opposed to buying from overseas. But retaining in-house manufacture allowed a greater focus on quality and after-sales service which improved the company’s reputation.
One of the cost issues was that the company produces bespoke Personal Training (PT) equipment and stopping the production line to produce these smaller batches was affecting the company’s profitability because of production down-time, re-tooling etc.
Moving from a three day commitment to these bespoke clients to a minimum two week commitment via ‘next available slot’ meant that these smaller batches could be scheduled together. That reduced the company’s down-time and waste.
I also renegotiated supplier deliveries to allow more processing ‘just in time’. This reduces the cash cycle and prevents capital being tied up for longer periods of time. Managing the inbound logistics so that they had multiple drop offs during the week also lowered their storage requirements.
I reviewed the company’s accounting treatment of direct costs, calculating their true break-even point against different production run cycles from their manufacturing. This meant that they could maximise the efficiency of their machines and their team’s time when calculating key performance metrics.
Those calculations also further supported the pricing of new bespoke equipment and meant that the company were clear on the costs and benefits of buying these new machines.
Back to Basics for this Global UK Company
Pauline works with the company to streamline and modernise their operations to improve working capital
This manufacturer and distributor of school electronic equipment has its Head Office in the UK and has worldwide sales offices and hubs in the US and China. Their warehouse was in Blackburn.
Working with the operations management we looked into the company’s stock planning requirements and brought planning together by using a single source of data. We developed a fortnightly planning cycle and implemented real-time three dimensional reporting of stock, supplier orders and the sales pipeline so that the company had a far clearer idea of what was happening throughout every area of its business.
The cash cycle also needed investigation because a lot of capital was tied up in stock that was either making its way around the world in inefficient and costly ways or was slow moving or obsolescent. Together we ran a project overview of slow moving and obsolescent stock and had a ‘fire sale’ of older products to free storage.
These measures together reduced the amount of stock that the company had to hold globally from $20 million to $10 million within twelve months. This is a huge improvement on the amount of working capital available to the company and enabled it to look to the future with big ambitions.
Together we next looked into changing the location of their distribution hubs and their transportation routes.
I undertook a review of their global logistics planning, starting with the European hub in the UK. 90% of their customers resided in Europe. Importing products to the UK warehouse only for European customers to collect then ship back to the continent did not make logistical or financial sense.
I led a feasibility study and implementation of a new, outsourced, 3PL warehouse in the Netherlands for the business to serve its European customers. This reduced in-house fixed costs and simplified transportation issues around the continent. The customers benefited from reduced transportation costs and improved time on collecting the goods whilst the business benefited from reduced sailing times from China to the new hub so there was less time for working capital to be tied up.
In the US we moved to transporting products from their China factory and supplier base through the Panama to Florida rather than crossing the Pacific to California and then transporting across the US. Although this increased shipment time by approximately five days it reduced transportation costs by 35%.
Viva Short Lead Times!
Pauline sources a new manufacturer in Mexico
This electronics company supplied hand held electronic devices as part of their range, mainly to the US. In fact 95% of their market was in North America.
The parent company used to have the products manufactured in China by an Original Equipment Manufacturer (OEM) Company and then shipped to the US for distribution to their clients. This meant there were long delays between a client placing an order and them receiving the goods.
From a previous contract, where I spent three weeks in Mexico, I knew that manufacturing in Mexico was comparable in cost to manufacturing in China. With my network in South America I was able to examine the feasibility of having the OEM supply partner in Mexico instead.
The advantages were significant. Mexico is part of the North American Free Trade Agreement (NAFTA) which meant smooth import of the devices to the US. Additionally the distance between the place of manufacture and the client were reduced which cut down lead time – from order to receipt – from 45 days (sea), 20 days (air) right down to a maximum 15 days which came in at a much lower cost and, with revisiting the production line build requirements, an improved quality.
I led the project feasibility, partner selection, price negotiations and implementation of the new supplier. The change also had a positive effect on the repair times for these devices which led to improved perception of the company and higher levels of client satisfaction.
This saved the company $1 million in the first year alone.
I have recently been recognised by the Department International Trade (DIT) LATAC for my experience with manufacturing and distribution companies looking to expand into the Latin and Caribbean markets. This means I am included within their External Referral Pool of service providers that help UK companies develop their business in the LATAC region.
Managing Manyana Maths in Chile
Pauline collaborates with BAI Consultancy from Santiago
When this UK Company, who distributes steel, started seeing sales and receipts slowing down from their working partners in Chile I liaised and collaborated with BAI consultancy to investigate. Based in Santiago BAI Consultancy supports UK businesses entering markets in South America.
Along with BAI I investigated the sales pipeline activity, the debtor management, cash receipts and overseas trade distribution and overhead costs, implementing weekly financial and operational reports for the UK company. BAI Consultancy supported investigations in Chile on behalf of the UK Company, at my direction, and their expertise enabled the UK company to get to the source of the problems they were encountering.
When sales and receipts slowed down, this caused financial road blocks for the UK Company and led to potential cash flow issues.
The sales investigations prompted conversations with customers so that the UK company could work out whether there had been any fall in goodwill towards them and provide analysis of sales trends and more detailed sales forecasting for pipeline reports. This was to see if the problems had any further consequences down the line.
BAI Consultancy worked efficiently and effectively at sorting out the problems which were basically down to what I call Manyana Maths. As soon as the company in Chile got themselves back in order all was well again.
The relationship between the UK Company and its Chilean working partners continues to thrive.
Next Steps for a Regional Logistics Company
Pauline gets their finances straightened out and ready for the next stage of growth.
This regional logistics group had been running for twelve months and was doing well but they had no real feel on finances beyond current debtor payments and recurring expenses.
They knew what they owed to others and what others owed to them but that was all.
I undertook a customer and market analysis and found that some of their customers were not profitable for them and that prices for those customers definitely needed reviewing.
Additionally here was a problem with employee performance in relation to customer expectations which was inefficient and costing the company too much in terms of overtime paid. With employee involvement I advised a shift pattern change as that provided a greater service to customers and also improved employee satisfaction.
Business planning that focused on business and cash forecasting led to the company outsourcing additional space so that they could grow their business.
The company continues to go from strength to strength and is growing in a financially sustainable way.
Leaving Departments Behind...
Pauline helps a finance department step up to the next level in a fast growing company.
This nationwide logistics group is experiencing rapid growth and the business needs some additional short term support for their existing finance team.
Basically the company’s rapid growth has left some departments behind – among them the finance department. There are a lot of things that the company doesn’t know and has no way of finding out by itself. Are they charging their customers enough to make a profit? Are they collecting their money fast enough?
I went in to support and review their current cash flow issues. I found that growth and outflow of cash was greater than receipt collection. The company needed improved data to make more informed decisions.
Their debtor management was failing, only invoicing weekly and managing accounts monthly. We implemented efficient processes to ensure invoicing was automatically issued with deliveries with weekly debtor management reviews to provide timely cash receipts.
Their supplier base had not been visited for over a year I led a review bench-marking their largest suppliers which lead to negotiations with existing partners to obtain best prices and terms without reducing quality or sourcing of new partners.
There is also a question about whether they should buy, rent or lease options for new fleet. Should they commit now on purchasing assets or hire to provide flexibility but potentially at a greater cost?
These questions will be answered when the data has been collected from the new management reporting pack I have put in place for their financial department. The pack includes key performance metrics so that they can identify opportunity against efficiencies and work out which options provide the best results.
I have created a new three year business forecast providing flexibility around various market demands. This will enable the business to work out various market scenarios with relating financial output for each. In addition the business forecast contained a detailed thirteen week / monthly cash flow template for the business so that they can continue collecting data by themselves.
I have trained the finance team to update and manage the new management reporting pack and forecasts going forward, although they will have my continued CFO support as I check in each month end on a on-going retainer basis.
Together we will be able to discuss the next steps for this business.