Challenge:
A distribution company had been operating at a loss, sustaining $1 million in annual deficits over several years. A detailed financial analysis revealed a weak cash conversion cycle, inefficient operational spending, and a low gross margin, all contributing to stalled profitability and cash flow strain.
Approach:
To turn the tide, the company partnered with Work Excellence to:
– Conduct a deep dive into financial operations, focusing on the cash cycle, gross margin, and below-the-line expenses.
– Launch a financial revitalization strategy centered on cost reduction, improved cash flow management, and strategic margin optimization.
– Build internal understanding of the financial levers that drive profitability.
This targeted approach was designed to realign financial fundamentals and reignite sustainable growth.
Solution:
The transformation was driven by a combination of:
01.
Workshops and coaching, aimed at building a shared understanding of the company’s financial realities.
02.
Cross-functional collaboration, ensuring alignment around profitability goals.
03.
Strategic consulting that guided the development of actionable plans to tighten expense control and boost gross margins.
The result was a more agile, metrics-driven financial management culture across the organization.
Results: The company achieved a dramatic financial turnaround:
The company returned to positive EBITDA in under 16 months, reversing years of financial loss.
Unnecessary operational costs were eliminated, improving cash conversion and liquidity.
Gross profit margin rose from 1% to 8%, marking a major leap in profitability.
Leadership built lasting financial discipline, positioning the organization for long-term
performance.
Key Takeaway
This case demonstrates the power of focused financial discipline and cross- functional alignment. By understanding the true drivers of cost and margin and embedding them into day-to-day decision-making this distribution company successfully transitioned from multi-year losses to profitability, creating a strong foundation for future growth.