Financial restructuring for industrial supply distributor

The client

• A $90 million industrial supply distributor

The challenge

• Emphasized growth over profitability and working capital management
• Lost money for three consecutive years; in default on bank covenants
• Longtime bank relationship deteriorating
• Suppliers holding shipments due to late payments

The solution

• Immediately focused attention on collections to improve cash position
• Kept bank involved and informed of plans, activities, and progress
• Measured sales performance leading to elimination of low-production salespeople
• Reduced administrative and overhead personnel
• Analyzed profit by customer and product; created new pricing strategy and shifted cost of certain personnel to customers

The benefit

• Reduced ineligible AR by $2 million
• Bank relationship stabilized during restructuring period
• Consistently profitable each month once cost reductions completed
• Obtained new financing on very favorable terms; previous lender paid in full