Managing cash flow
While managing your cash flow is always vital for a business owner, rapidly rising component costs and energy costs have put added pressure on balance sheets. Even the most diligent and responsive company has been impacted by input costs rising rapidly. As a result, they’ve had to pass on unexpected costs to customers.
Couple this with extra time and money spent on remedial measures caused by the stress of over-capacity, and any gains that were made following the much-publicised spike in demand following lockdown could easily be wiped out.
In fact, some companies are coming under extreme pressure at the end of their financial year with profit margins being squeezed tighter than expected.
So, is there any way for fabricators to release cash in their businesses without resorting to drastic measures? According to Greg Beachim, Sales Manager of First Degree Systems, one of the biggest drains on capital is stock, with many fabricators holding way more than they require. But don’t worry. Freeing up that value is much easier than expected.
“I’ve been into window fabricators where production managers haven’t been aware of what profiles they have sitting at the back of their warehouses,” Beachim says. “It’s not uncommon for an order to be made for new profile because accessing product that is out of the way at the back of the yard is too difficult.
“Interestingly, when supply of profile was delayed in the months following lockdown, some fabricators were able to keep going because they ‘found’ extra product they weren’t aware of.”
Beachim goes on to suggest that by using the right software, real efficiencies can be found, which can free-up cash and valuable space.
“Good stock control comes down to understanding demand,” he says. “If you know what you want, and when you want it, you don’t need to buy profile on spec. As homeowners have more product choice, it is more important than ever to keep stock levels down, otherwise you could find yourself bursting at the seams.”
Stock Assistant
First Degree Systems’ Stock Assistant programme integrates fully with Window Designer, and gives fabricators full oversight of their stock holding. It can offer just-in-time stock ordering, pre-allocate requirements and even reconcile accounts.
“This means that you can reduce your general stock overhead, and you’re buying in at demand,” Beachim explains. “And if you’re working effectively with your stock lead times, you will reduce your stock levels. Generally, this will release the money that you’ve got tied up in stock. And what it means for the future is that you are not overburdening your stock requirement.”
A significant knock-on effect of this is that you don’t have to find extra space to put stock in, and you can free up additional floor space, which can be used profitably.
Barcode Tracking
“But the great thing with our Stock Assistant programme is that also it works with our Barcode Tracking system, which makes drawing down the stock much simpler,” Beachim says. “And we’ve got a Stock Assistant companion application that enables you to bolt that in on the shop floor. As a result, stock checks are simpler, booking in stock is simpler and downgrading stock from the shop floor is simpler.
“You join these things together and you’ve got a suite of products working hand in glove, making you much more competitive, and releasing cash flow.”
Beachim has seen, even from medium-sized businesses, around £150,000 worth of released capital thanks to effective stock control, which can be critical for any business.
“If you buy the wrong product, it can potentially sit on a shelf for months and degrade, and you end up throwing it away,” Greg argues. “If you’re ordering according to what you need in terms of workflow, then you’re only ever buying what you require, freeing up that cash to manage the extra challenges that we are currently facing.”
To find out more please visit www.firstdegreesystems.com, email [email protected] or call 01283 808042.