WMEP Manufacturing Solutions (formerly the Wisconsin Manufacturing Extension Partnership), is a nonprofit consulting organization that helps the state’s manufacturers expand their capabilities and optimize their operations.
Focus Forward recently talked to George Bureau, vice president of WMEP’s consulting services, about the Discover2Recover program the organization launched in June. The program uses funding from the federal Coronavirus Aid, Relief and Economic Security (CARES) Act to help small and midsize manufacturers assess and improve their cash flow.
Can you give a brief description of WMEP and the Discover2Recover program?
WMEP Manufacturing Solutions is focused on helping Wisconsin’s manufacturers become more profitable and valuable. We know manufacturing and offer a full suite of services, from growth and operational excellence to automation, human capital, certifications and sustainability. We offer the perspective of an outside party. What best practices are in place? Where do I take the company from a revenue perspective? Where do I pivot? Where do I automate?
Right now, we’re focused on helping manufacturers successfully navigate the challenges brought about by COVID-19 and the economic crisis. There are the challenges around how to handle COVID in facilities, but the biggest challenge is financial performance being really negatively impacted.
We have CARES Act funding that has rolled down into each of our focus areas, and Discover2Recover is one of the programs we have developed in response to the crisis. It’s entirely free to manufacturers. It’s a confidential assessment that results in recommendations for increasing cash flow and stabilizing their cash reserves in order to give them more time for operational concerns.
How can better cash management help manufacturers get through tough times?
Cash flow is the number one killer of new and existing businesses. If you run out of cash, you can’t pay your suppliers and you can’t pay your people. When orders come in the door, you have cash going out the door to buy raw materials and to pay for labor. You make a product, you ship it, you invoice it to the customer, and then you have to wait for the money to come in. For many manufacturers, that’s 30 or 45 days. You need to balance the money coming in with the money going out.
Manufacturers are working hard not to lay people off right now, but if you pay workers to clean and do other things around the facility, you’re not generating any value and over time you have to start using your cash reserves.
What will be covered in the Nov. 20 Discover2Recover webinar?
The webinar will be an introduction to what we offer through the program, but we’ll also be providing tips on what companies can do on their own and what to look for. What levers do they have to stabilize or increase their cash flow?
We recognize that many companies don’t have the wherewithal to do it. They need an outside set of objective eyes to look at it. The Discover2Recover program is fully funded, so it doesn’t cost the manufacturer anything, and we plan on running it through September 2021.
We’ve already had about 100 companies go through the program, and it’s been very successful. We’ve seen several them significantly increase and stabilize their cash flow.
What are some basic cash management practices companies should make sure they’re doing?
What we find is that a lot of companies really don’t know where they stand. They don’t manage their cash or don’t have the processes in place to manage it well, so when things get tight, all these problems pop to the surface. We’ve seen too many situations where “hat I thought I had isn’t what I actually have.”
It can be as simple as, do you call your customers and remind them to pay their bills? The companies that do get paid faster. Are you paying your suppliers within 15 days, but not asking for payment from your customers until 60 days? If you’re able to not pay your suppliers so fast, that frees up cash to be used for other things. Much of this work around cash flow is not fun, exciting work, but if you manage it well, you can stay a lot healthier.
How is Wisconsin’s manufacturing industry weathering the pandemic?
Based on our most recent pulse survey in October, roughly one-third of Wisconsin manufacturers are still seeing declining sales, which means they have not yet hit the bottom. So we’re not through the worst of it for them. If you take your eye off the ball, you can end up in crisis very quickly, and we don’t want that to happen. When you’re in a tough situation, if you manage your cash, you have more time to make the changes you need to make. We can help them buy that time.
A third of our manufacturers are busier than they were, and their cash is tied up in inventory. We can help them adapt and get more out the door. And for the rest, we can help take those companies to a higher level of performance.
There is still time to register for WMEP’s free webinar on Nov. 20. The free webinar will give an overview of the Discover2Recover program, but attendance is not required to apply for the program.