The Numbers You Inherit
PACIFIC PREMIUM, FROM THE SUCCESSOR'S CHAIR
MANUFACTURING · THE SUCCESSOR'S CHAIR · DIFFICULTY 3/5
What do you build before the next meeting?
Read your desk
// THE SETUP
You are the second generation at Pacific Premium. Three years ago your father, who founded the company and still runs it, moved you onto the commercial side: the supermarket accounts, the food-service contracts, the pricing. The growth since then is partly yours. US$28m became US$42m, and the letter that arrived on Thursday says the bank has declined his request for US$1.5m more on the working capital line.
You have read the letter twice. It does not say the business is failing. It says the cash cycle has doubled: debtors that paid in 48 days pay in 82; stock is up 138% on sales up 50%; operating cash flow has turned negative. It offers a term loan for the permanent part and a smaller line for the rest. Your father read it once, called it an insult to six clean years, and has the other bank's relationship manager coming in on Tuesday to hear the growth story.
You know things the letter does not say. Two of the supermarket accounts you brought in pay at 90 days as policy. The stock build is three new lines, two of which are moving. Nobody at the company has an aged debtors report that is less than a quarter old.
Your father is bringing the growth story to another bank. The bank that said no named the cycle. What do you build before the next meeting?
Two years ago customers paid in 48 days; now they take 82. The gap between the two is the file the next generation will be asked about first.