Working Capital reduction by EUR 20m
For an international service provider in the field of facility management, we assumed operational responsibility to reduce working capital by more than EUR 20m.
Case study
Working Capital reduction by EUR 20m
For an international service provider in the field of facility management, we assumed operational responsibility to reduce working capital by more than EUR 20m. We achieved the savings within six months of starting the project (with the client growing their revenue by >10% in the same timeframe).
Initial Situation
Our client is a facility management service provider with around 30 subsidiaries. In the context of a refinancing, our mandate was to reduce bank debt by lowering working capital.
Challenge
The company’s very diverse IT landscape made it initially rather difficult to find out what level of working capital (in other words services to be invoiced and outstanding invoices) existed in which entity of the group. In addition, the operating companies were culturally focused on delivering outstanding services to their customers to encourage follow-up orders – whereas getting customers to pay quickly after the performance of services was a rather uncomfortable task for MDs of the operational units.
Measures
- Introduction of a cloud-based tool for working capital reporting and an automated dunning process
- Operational support for working capital management
- Facilitation of intensive discussion between group management and subsidiaries on the subject of working capital discipline
Client Success
Just over EUR 20 million in working capital was saved – allowing the client to reduce its bank liabilities by the corresponding amount. And the IT tool we introduced, along with the new openness between group management and the subsidiaries, continue to allow working capital measures to be quickly utilized for internal financing purposes.
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