Manufacturing group with 4 entities: how consolidation killed cash gaps that lasted 3 years
Manufacturing business at $32M revenue. 4 entities. Cash gaps twice a quarter. Owner: «One entity has lots of cash, another has none — I don't get where the money is».
STARTING POINT
Four related entities: manufacturer (core), trading house, logistics, service/repair. 60% of revenue is internal turnover between them. Each its own bank, its own books, its own real cash position.
What we found
- Inter-company AR/AP unmatched: $1.2M stuck in transit accounts
- Cash silos: $640K sitting in one entity while another paid 22% overdraft to make payroll
- Margin per entity calculated separately, without IC eliminations — trading house «profit» turned out to be a group loss
- Cash gaps surfaced with the quarterly report — too late to react
Architecture
Not a new ERP. Not a restructure of legal entities. Four engineering changes on existing infrastructure: cash pooling, group-level treasury, real-time IC reconciliation, group 13-week cash flow.
| Cash gaps | 0 (vs 6 in prior year) |
|---|---|
| Working capital need | −$2.4M (released from transit accounts) |
| Group close | T+11 → T+6 |
| Owner time on «where's the cash» | ~6 hrs/week → 30 min/week |