Getting better control of the Group’s cash flow, debt and financing

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Getting better control of the Group’s cash flow, debt and financing

Interview with Clément LETOURNEUX, Cashsolve user

About the company

International wine and spirits group

Marie Brizard Wine & Spirits is a wine and spirits group established mainly in Europe and the United States. The group has a rich portfolio of leading brands, including its six “pillar” brands.

The group markets its products through its own distribution networks in France, Poland, the United States, Spain, Lithuania, Bulgaria and Brazil, and exports its products to over 100 countries.

MBWS currently takes in about 450 million euros in annual sales revenue, and employs about 3,000 people in 12 different countries.

In 2014, Jean-Noël Reynaud brought a burst of fresh energy to the Group’s upper management team as part of the restructuring and recovery process for the company formerly known as Belvedère. Getting cash flow, debt and financing under control was essential for the Group to get back on track.

We talked with Clément Letourneux, the group’s Cash Flow and Financing Director

Clément LETOURNEUX, Cash Flow and Financing Director

Deploying the project during the recovery process

The importance of getting cash flow under control

The Group was just emerging from safeguard proceedings which had drawn a lot of attention in the press. The new management team realised very quickly how important it was to get the Group’s cash flow under control. One of their first priorities was to find a business tool that they could use to set up and manage cash flow forecasts for 12 different countries and 6 foreign currencies…

At the time, the cash flow forecasts were being built in an Excel model transposed into Anaplan. This model had a number of faults:

  • a view of gross cash flow, but not of net debt
  • a lack of understanding of the locally constructed model
  • a view of flows, but not of balances: no WCR, no EBITDA-to-cash analysis, no calculation of bank covenants
  • no modelling of tax debts, despite their central importance in a sector that’s subject to excise duties on alcohol

Why did you choose Cash Modeling ?

We could have gone with a BI tool like Hyperion, etc., but that would have required us to create a model completely from scratch, which would have meant mobilising lots of different skills over a long period.  The other alternative was to keep the Excel model and choose one of the Big 4 as a consultant, but that turned out to be difficult for our internal teams to integrate – and even more difficult to maintain across 12 countries and 6 foreign currencies. Not only were those solutions were more expensive than CashSolve, but they would have also required us to spend many days of work on constructing the model.

I was already very familiar with Cash Modeling, and I knew it would be able to adapt to all of our specific requirements.

What would you identify as the 3 biggest advantages?

1. Complete management for all of our forecasting periods

We can now construct and manage:

  • a 13-week consolidated cash flow forecast, prepared locally and revised once a month
  • an annual cash flow budget forecast, revised multiple times at the end of each of the Group’s accounting periods
  • a 5-year plan, revised annually, with automatic calculation of the most important KPIs – from EBITDA, to WCR, DSO, DPO, DIO and ROCE ratios, to bank covenant ratios.

2. Operational management to improve cash performance

Having an excellent understanding of our cash flows allowed us to identify and manage the leverage points that generate the most cash. That helped us to establish highly effective ways of quickly freeing up cash from operations: customer factoring contracts, improving our rating and therefore our supplier payment conditions.

In parallel, we were able to set objectives for our clusters, for our operational managers at the country level (e.g. inventory delivery objectives per country, per legal entity, etc.), or for our purchasing departments to improve supplier payment conditions. A committee meets every month to review our achievement of those goals.

3. A common language, a structured approach

We have deployed Cash Modeling in all 12 countries where the Group is active. The first advantage is that we now have a common language and a common model shared by all of our subsidiaries. Secondly, we’re able to complete our intercompany reconciliation, manage currencies, and consolidate our data, despite the very large amount of data involved. I also have to mention that, because the solution is extremely simple to use, we haven’t had any problems with acceptance by our teams.

Is there a quantifiable ROI?

Beyond the obvious time savings, it’s tough to calculate an ROI, considering how strong the added value is and how widespread it is throughout multiple management processes. Right from the first accounting period, we started seeing the payback in terms of the clear and detailed view we had of the cash being generated by the Group.

The added value provided by the expertise of CashSolve consultants was undeniable. Beyond the tool itself, their efficiency, their instincts, and their advice, based on their years of experience, saved me a lot of valuable time.

Pour conclure ?

This project was a real success, and it’s recognised as such at all levels of the Group. The quality of CashSolve’s methodology has also been a big factor in CashSolve’s success at MBWS.

Retrouvez aussi  l’article des Echos Executives : ” La gestion de trésorerie, clef du redressement de Marie Brizard ” 

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