Optical Equipment Case Study
Link placed an interim CFO into the company to help it resolve its profitability problems
Company profile:
Optical equipment distributor: sales, hire, repair
Turnover:€15 million
Pre-Tax Result: € 4m loss
Debtors: €7m.
The problem:
Improve profitability & cash flow or consider sale/closure
The issues:
- Lack of management information
- Poor credit control and cash collection
- Lack of stock / asset controls
- Haphazard branch sighting
The actions:
- Implement stock and asset controls
- Introduce strict credit controls and aggressive collection of overdue debt
- Review of business leading to:
Rationalisation of branch network
15% reduction in personnel
Reduction in overhead costs
Sale of redundant hire equipment
Implementation of new information systems
Reduction of stock levels
Review and subsequent change of sales team
Staff training and appraisal
The results:
- Over 2 year period company returned to profitability
- Gross margin improved by 33%
- Debtors reduced by 48%
- Additional 6.6m of capital from shareholders on strength of improved controls and performance
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