Solutions

Rethinking your assets strategy

Numerous research has shown, companies that constantly achieve high asset efficiency ratios outperform their peers and attract both growth and cautious investors. Yet, many companies are unable to monitor their Asset performance and quickly act on it due to systems data, reporting structures, complex overhead allocations, and fear of having to take on impairments. The bull market, abundance of cash in the past decade, the race for unit cost reduction, supply chain control and economies of scale have all contributed to an increase in assets intensity and a reduction in supply chain agility. Whilst in good times and expanding markets such practices appear safe and appealing, asset intensive sectors like chemicals, construction, automotive, oil & gas are the first to feel the brunt of stagnation, decline in sales and competitive pricing.

Asset intensive ventures are no longer limited to financial KPIs but also coming under scrutiny from a social, ethical and environmental standpoint, as such companies need to rethink their assets strategy from early stages of capital allocation to continuous improvement and exit.

Understanding your Assets Performance

A comprehensive analytical, financial, operational and commercial assessment on Assets can be conducted to identify opportunities for improvement and inform the direction for change


Analytics & Financial Performance of Assets


Asset types & balance sheet strip

  • Cash & Cash Equivalent
  • Receivables & Inventory
  • Payables for Net WC
  • Plants
  • Real Estate
  • Warehouses & DC
  • Fleet
  • Intangible Assets

Peers Benchmark

  • IDSO (Receivables)
  • IDIO (Inventory)
  • IDPO (Payables)
  • Capex / revenue
  • IROCE
  • IROA
  • IAssets Turnover

Assets KPIs, balanced scorecard & analytics

  • Historical asset evolution
  • Ratio analysis (ROCE, ROA,…)
  • Asset sales and margin turnover by product, by BU, asset, geography, market segment…
  • Non production assets KPIs and allocation principles
  • Workarounds on allocations
  • R&D and Intangible Assets allocation
  • Minimum cash requirements and excess cash calculation

Capex and R&D analytics

  • Historical capex spending
  • Adherence to budget
  • Capex plan and capital allocation principles to corporate assets


Operational & Commercial Performance of Assets


Fixed assets performance & value creation

  • OEE and downtime
  • Asset Management
  • Detailed CRP
  • Production scheduling
  • Shop-floor layout
  • Throughput analysis
  • Product portfolio profitability by Asset

Leases, economic life & depreciation

  • Asset Economic life
  • Depreciation accounting
  • Tax implication
  • Financing Costs

Assets associated costs & social impact footprint

  • Maintenance & refurbishment
  • Utilities
  • Headcount to operate Asset Engineering Costs
  • Facilities management / HSE
  • Insurance, rent, etc.
  • CSR, sustainability, business ethics, carbon footprint

Working capital levers & assets trade-offs

  • Suppliers, supply chain production & customers impact on NWC
  • Trade-offs between Fixed assets and WC, between WC elements and between cost, cash, service and flexibility

Improving Returns on Invested Capital

We have developed 6 solutions to help our clients re-evaluate and improve the performance of their fundamental balance sheet assets portfolio.

Current Assets

1
Put excess cash to profitable use in current assets
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

2
Optimise for margin service, cost & cash
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

Fixed Assets

3
Do with less upfront capital
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

4
Better use of existing capital assets
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

5
Align assets to operations strategy
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

6
Do more with existing assets
Find out more

Current Assets

Excess Cash Allocation to Trade Working Capital

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

Contacts

Jan-Dominik Remmen

Jan-Dominik Remmen

Partner

Jan is a Financial Advisory Partner and is leading the Swiss Restructuring practice. For more than 20 years he has led international assignments focusing on Restructuring and Corporate Finance project... More

Alain Fares

Alain Fares

Director

Alain is a Director in our Value Creation Services with 17 years combined industry and consulting experience. He specializes in Margin and Cash Flow improvement through supply chain restructuring, ope... More