The challenge permalink
Our client was a contract packaging company focused on snack foods. They were using additional equity and any available cash flow to purchase inventory. The company was always behind on vendor payments, close to 90 days payable, and COD or cash in advance was required from many vendors. There was always a cash crunch and thus no ability to invest in productivity.
The Virtuoso approach permalink
We helped the company bring in a lender to provide a revolving credit facility, allowing them to borrow against current inventory and accounts receivable. There was no need to utilize cash flow tied up in inventory, and the company was not held hostage by late payments from customers. As such, they were able to get back on good terms with suppliers and take advantage of discounts. Moreover, they were able to use true cash flow to invest in things that grew the business and made it more profitable and valuable.
The results permalink
- Increased revenue from $7.5MM to $32MM
- Increased EBITDA from negative $1.5MM to positive $2MM
- Company was able to enter long-term contacts with national brands
- With the improved cash flow, the company purchased more modern manufacturing equipment that increased productivity, and ultimately purchased a new facility in the Midwest
Now is the Time permalink
Virtuoso Strategic Group is a boutique consulting firm formed to deliver extraordinary value to its clients. We pride ourselves on alignment with the fortunes of our clients and an unwavering commitment to their success. We welcome you to start the conversation today.