About this video
A $35M commercial roofing company in a low-bid market couldn't touch price. Every day it waited to chase collections was worth about $100,000. Collecting 10 days faster and paying 5 days slower released $1.3M.
Transcript
Jay Dotson: So for this organization, this case study, we're working with a $35 million commercial roofing company, and he's in a low-bid situation. So I didn't want to touch the pricing component, because that's going to take away his clientele, right? He's actually trying to compete on price, and that's the only way he wins.
Jay Dotson: So we went straight to: how do we solve this cash flow issue based on the collections and the payables within his organization? And we found that when we ran his numbers, every day that he waited to pick up the phone and chase down collections was worth about a hundred thousand dollars to him.
Jay Dotson: As soon as he heard that, there was another founder in the room. It was a partnership. He looked at the other guy and said, "You better get on the phone tomorrow, or right now."
Jay Dotson: Would you rather that $100,000 sit in somebody else's company or your company? How would you deploy that today, right? Versus financing at 0% interest, waiting until it's convenient for your client to pay you.
Jay Dotson: So I started to ask him, "Well, one day seems easy, but how far do you think you can take this?" He said, "Oh, I think we can get it down by 10."
Jay Dotson: So we improved this by 10 days, and we also looked at his payables. I see this all the time with accounting staff: they get invoices in and want to go ahead and take care of them, because it's another box to check off the list. So we pay it, not realizing that could be float for us, money we hold in between until it's actually due, right?
Jay Dotson: So how do we create more margin? Accelerating receivables by 10 days, and delaying payables by five days, because he got 30 days based on what people are willing to give him in terms. That was a $1.3 million improvement to his cash balance.
