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Industry

How can cash flow management be optimized in an industrial company?

Industrial companies have very specific cash management needs, which we will analyze in this article. We will look at best practices for successfully managing these issues and finally, we will see how cash management software such as Fygr can help address these problems.
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Industry: key points to remember about cash management

Cash management is a critical issue for industrial companies, which face long cycles, heavy investments, and high working capital requirements. Tensions arise from a structural mismatch between production, capital immobilization, and cash receipts:
High capital investments tying up resources over the long term
Volatility of raw material costs impacting profitability
Structurally high working capital requirements with high inventory levels and long customer payment terms (60-90 days)
Multi-site organizational complexity requiring a consolidated view
Fygr enables industrial companies to secure their cash flow and investments by providing a clear, consolidated, and forward-looking view of financial flows.

Specific cash flow challenges for industries

Why is cash management particularly difficult for companies in the industrial sector? We have identified three major issues.
Significant investments and long production cycles
Volatility of raw material costs
Customer payment terms and tied-up inventory

Significant investments and long production cycles

The industrial sector is characterized by very heavy initial investments, requiring significant capital expenditure on equipment, infrastructure, and technology.

These investments, often spanning several years, tie up significant financial resources for periods of up to several years before generating a return on investment.

The average length of production cycles, varying between three and six months, amplifies this strain on cash flow, forcing industrial companies to maintain substantial financial reserves to absorb these time lags.

Volatility of raw material costs

The industry is particularly exposed to sudden fluctuations in raw material prices, which can have a direct and massive impact on companies' profitability.

These fluctuations, often linked to complex geopolitical or economic contexts, create permanent uncertainty about production costs.

Industrial companies must constantly anticipate, absorb, and pass on these variations, which requires particularly well-developed financial agility and strategic forecasting capabilities.

Customer payment terms and tied-up inventory

Industrial companies face particularly long customer payment terms, generally between 60 and 90 days, combined with long inventory turnover cycles of up to 45 to 90 days depending on the sub-sector.

This dual constraint creates a very significant working capital requirement, tying up a significant portion of cash flow.

Managing these inventories, financing them, and waiting for customer payments represent a constant financial management challenge, requiring complex forecasting and anticipation capabilities.
BEST PRACTICES

Best practices for cash management in a manufacturing company

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Mastering investment and production cycles

In industry, capital investment management is a major strategic issue. Companies must develop a proactive approach to planning production and investment cycles, accurately anticipating medium- and long-term financing needs. This strategy involves a detailed analysis of equipment depreciation periods, a rigorous assessment of return on investment, and a detailed projection of the cash flows generated by each investment. A thorough understanding of these mechanisms makes it possible to accurately calibrate the necessary financial resources, minimizing the risk of cash flow problems and optimizing the allocation of resources between different industrial projects.

Secure supply and inventory management

Supply chain management is a crucial lever for financial performance in industrial companies. It is becoming essential to develop advanced negotiation strategies with suppliers, enabling companies to secure supplies while controlling costs. This requires a detailed analysis of fluctuations in raw material prices, the implementation of flexible contracts, and the creation of strategic inventories without tying up too much capital. The goal is to create an optimal balance between production continuity, protection against market fluctuations, and the preservation of financial liquidity. Constant monitoring of raw material markets and the ability to adapt quickly are therefore becoming major competitive advantages.

Optimizing multi-site financial flows

Industrial companies, often organized with multiple production units, need to develop a consolidated and dynamic view of their financial flows. This approach requires the implementation of harmonized financial reporting processes, enabling accurate traceability of inter-plant transactions and an instant view of overall performance. The challenge is to create fast and reliable information reporting mechanisms that enable financial departments to monitor the performance of each site in real time and make strategic decisions. This centralization of financial data also facilitates early risk detection and the identification of levers for operational optimization.
CHOOSE FYGR

Why use Fygr for a company in the industry?

The solution for optimizing your cash flow management: use specialized software such as Fygr. Fygr already supports many industrial companies in their daily cash flow management. Let's take a closer look at how cash flow management software such as Fygr can help an industrial company manage its cash flow in the best possible way.
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GOOD REASON #1

Automatic bank synchronization

Centralize and optimize your financial flows across multiple industrial sites
Automatic categorization of production costs by profit center
Connection of all the company's banks
Graphical view of company performance
GOOD REASON #2

Cash flow forecasts

Make a forecast of all your company's indicators so you know what to expect.
Modeling long investment cycles (industrial equipment)
Simulation of the impact of raw material price fluctuations on cash flow
Projection of medium-term financing requirements by strategic project
GOOD REASON #3

Comparative analysis forecast/actual

Track and optimize your financial performance in real time
Comparative analysis of financial performance by production line
Custom dashboards with key industrial performance indicators
Real-time adjustment of budgetary and strategic assumptions

They chose Fygr

Here's what some of our customers have to say after choosing Fygr to visualize their financial data:
The tool is both simple and incredibly effective. It now helps me anticipate and pushes me to take action thanks to a clear vision for the months ahead. The scenarios allow me to explore all my ideas and, with one click, compare the results of my scenarios. It's a real game-changer for my organization. I love it!
Fabien Mourioux
Founder and CEO @ Infocrea & AFM Production
FYGR is an excellent tool that allows you to accurately track your figures (cash flow/income/expenses/forecasts) on a daily basis. Thanks to the categorization of expenses, it is very easy to forecast expenses, including automatically and over several years. The support team is very responsive and attentive, thank you to them. The solution is stable, easy to use, and flawless.
Simon Giron
Founder and CEO @ Naobike
A useful tool that is very easy and fun to use.
Excellent support for configuration settings.
Laurianne RUAS
RAF @ Plastic At Sea
FAQ

Everything you need to know about cash management for industrial companies

Answers to the questions you ask us most often.
How to choose cash management software for an industrial company?
To choose the right industrial cash management software, start by identifying your specific needs: volume of inter-plant transactions, number of production sites, complexity of financial flows. Choose software that offers features tailored to long investment cycles.
What are the advantages of cash management software over Excel for an industrial company?
Cash management software offers complete automation of complex processes, significantly reducing calculation errors and processing time. Unlike Excel, it enables real-time synchronization of multi-site data, dynamic projection of investment cycles, and accurate comparative analysis between forecasts and actual results.
How can reliable cash flow forecasts be made in the industrial sector?
To make reliable forecasts, collect accurate historical data on production cycles, equipment investments, and raw material cost volatility. Analyze your cash flow cycles, taking into account the seasonality specific to your industrial sub-sector. Include all recurring costs, equipment depreciation, and medium-term investment prospects. Use multiple scenarios that take into account potential variations in raw material prices.
How long does it take to implement cash management software for an industrial company?
Implementation varies depending on the complexity of your industrial organization, generally taking anywhere from a few weeks to a few months. The timeframe depends on the number of production sites, the diversity of financial flows, and the need to integrate complex historical data. Good industrial software should allow for gradual implementation, with step-by-step synchronization of the various sites and existing IT systems.
How much does cash management software cost for an industrial company?
Prices vary significantly depending on the size and complexity of the industrial organization. Prices at Fygr start at €59 per month per entity and per bank account. It is crucial to consider the return on investment, particularly in terms of productivity gains, financial optimization, and risk reduction.
Who are the competitors in the industrial treasury software market?
Fygr's main competitor in the cash management market is Agicap. Agicap is known for offering features that are sometimes too complex. Some Fygr customers mention the "overly complicated" nature of the solution. Finally, Agicap's prices are much higher than Fygr's.
How do I know if my industrial company needs cash management software?
Your company needs this type of software if you are having difficulty forecasting your medium-term financial situation, if manually managing cash flows between multiple sites is becoming complex, if you are experiencing significant volatility in production costs, or if you lack visibility into your investment cycles.
What are the essential features for industrial cash management?
Key features include multi-site bank synchronization, dynamic forecasting incorporating long investment cycles, fixed asset tracking, management of commodity price fluctuations, industry-specific dashboards, financial risk alerts, and the ability to simulate macroeconomic impacts.