Challenge
- Company caught in liquidity growth caused crunch.
- $1.6 million EBITDA.
- $1.5 million annual interest expense.
- $0.5 million minimum principal payments.
- $150,000 A/P with 30-day maximum terms.
- $(1.3) million loan over-advance position.
Solution
- Built a 52-week cash forecast.
- Secured additional supplier credit terms.
- Explored purchase of needed key asset (gang saw) to increase sales, lead times and reduce payroll
Results
- Generated $435,000 additional liquidity by extending terms with selected suppliers to 45 and 60-day, increasing A/P to $585,000.
- Funded purchase of gang saw via additional supplier liquidity
($2) million additional sales
($0.4) million additional EBITDA.
- Provide additional working capital to grow the business by negotiating increased advance rates on inventory in drying yards.
- Helped management restructure the business to allow for continued growth.
