Furniture Manufacturer from Wroclaw: 12% Liquidity Recovery
The company was struggling with rising raw material costs. We reorganized the payment structure and secured 18-month futures contracts.
The company Meble Wrocławski Styl from Wroclaw fell into a cost trap. They had to pay suppliers almost immediately while waiting weeks for money from stores. Numbers don't lie – without quick changes in the expenditure structure, the company could lose its footing even before the end of the season.
The challenge
In March 2024, the price of beech and oak wood jumped by 17.3% almost overnight. The workshop employing a 14-person crew had 43 active suppliers, but payment terms were set according to the wholesalers' dictates. The company had to freeze about 84,200 PLN per month in goods alone, which, combined with payment delays from contractors, caused dangerous budget holes.
The lack of free cash caused a real problem in May with paying energy invoices and timely bonus payouts. Traditional management methods stopped working in the face of such rapid market fluctuations. We protect your capital, so we had to act quickly to stop this leak.
Our approach
The Korporacyjna Racja Stanu team spent 11 business days at the client's headquarters. We analyzed every invoice over 450 PLN from the last two quarters to understand exactly where the money was escaping. We focused on hard negotiations with 8 key suppliers who accounted for 64% of material costs.
We assigned Piotr, our risk analysis specialist who previously worked in the banking sector, to the project. By the way – we had to fix the raw warehouse record system on-site, because due to a mess in the papers, no one knew exactly how much material was on the shelves waiting for processing. Only after organizing the inventory could we move on to purchasing planning.
The solution
We rebuilt the entire short-term liability structure. We extended payment terms with key partners by an average of 14 days, allowing the company to breathe. We introduced futures contracts for raw material purchases, which froze prices for the next 18 months. This is a crucial action because now sudden price jumps on the exchanges don't hit the manufacturer's margin.
Additionally, we implemented a new flow for cost documents. Instead of waiting for the physical signature of the production manager, the system moved to digital approval. This shortened invoice verification time from 4 days to just 1.5 business days. Security first – every zloty spent above the established limit must now go through a two-stage purpose verification.
Results
By tightening spending and establishing new agreements with suppliers, Meble Wrocławski Styl regained full operational peace. The company stopped financing its suppliers at the expense of its own payouts and can now safely plan production for three quarters ahead.
Timeline
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March 2024Full audit of 43 contracts with raw material suppliers
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April 2024Negotiation of new payment terms with wholesalers
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June 2024Launch of the digital cost approval system
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August 2024Signing futures contracts for beech wood supplies
"Before, every month I trembled about payouts for people because wholesalers raised prices without any warning. Korporacyjna Racja Stanu pointed out exactly where the money was leaking and how to talk tough with suppliers. Now I sleep more soundly because I know how much I will pay for wood next year."