Precision Engineering Firm Achieves 40% Cash Flow Improvement

🎯 The Challenge

This 25-person precision engineering firm faced a critical cash flow crisis despite being profitable. Long payment terms from large automotive clients combined with increasing raw material costs created a dangerous cash gap that threatened their ability to fulfil orders.

💡 Key Issues:

• ⚠️ 60-90 day payment terms from major clients
• ⚠️ No visibility beyond current week’s cash position
• ⚠️ Missed early payment discounts costing £15K annually
• ⚠️ Unable to take on new contracts due to working capital constraints

🚀 The DVFO Solution

We implemented our Growth Package, providing 13-week rolling cash flow forecasts and strategic financial planning:

📊 Actions Taken:

• ✅ Established weekly forecast reviews with management
• ✅ Renegotiated payment terms with top 3 clients (reduced to 45 days)
• ✅ Implemented strategic early payment discount programme
• ✅ Secured invoice finance facility for growth opportunities
• ✅ Created cash-aware production scheduling

📈 The Results

Within 6 months, the transformation was remarkable:

• 💰 40% improvement in cash conversion cycle (from 78 to 47 days)
• 💰 £45K increase in working capital available for operations
• 💰 £18K annual savings through optimized supplier payments
• 💰 Accepted 3 new contracts worth £250K that were previously impossible
• 💰 Zero late payments to suppliers, improving relationships and negotiating power

💬 Client Feedback

“DVFO’s cash flow forecasting gave us the confidence to grow. We went from living week-to-week to planning quarters ahead. The peace of mind alone is worth it, but the financial improvement speaks for itself.”

— Managing Director

“The weekly forecast reviews keep everyone accountable and aligned. We make better decisions now because we actually understand our cash position.”

— Operations Manager