We came in and we turned that from you know, 30, 40 minutes to 30 seconds. Right. So we're able to incrementally build customer service and use value within the organization relatively quickly. And another thing that a lot of people skirt over is the working capital opportunity within the business.
Acquiring Minds
$60m Roll-Up That Started With an SBA Acquisition
Excerpts · 332 segments · ~1:28:49 long
Short excerpts only — hear the full conversation on the publisher's site.
Right. A lot of small businesses, they're receiving their receivables in 30 days, but they're paying their vendors in 10 days. So there's a huge working capital benefit there if you can. Right size, right size, that, that formula.
So we set an opportunity early on and, and, and, and, and Brian, he, he's always on that. Right. Once he sees a working capital opportunity, it's, it seems like a great deal for us because we're able to get that cash on the balance sheet and invest more in the business.
Excellent. Working capital is, is a them time and time again. It's such an important feature of small businesses. It's so often misunderstood.
Sounds like you guys understood it really well. Can you be more specific about how, how you, how you change the, the payment terms, both money coming in and going out to your advantage? Sure, I can touch on that.
Onu. There's a really good case study actually out there Will on, on from Yale on this that I read subsequently after doing a couple of deals to help fine tune this. But essentially it talks about stress testing both sides of that.
So on the AR side getting invoicing out as quickly as you as you can, offering small discounts for early payment where possible, having regular collection checks and figuring out, you know, stay in close, close contact with your customers on those dynamics. But really on the payable side is where I've found that that's typically in freight. You've got a wide range of payables.
You've got tons of large carriers, small carriers, there's factory companies are quite popular in the space and all of those different vendors have different payment needs and payment requirements. So typically stress testing the payment days, adjusting them over time, gradually changing them over time, evolving from checks to electronic. We're all electronic now, but we'd inherited a legacy…
So there's lots of different dynamics around that. Um, but when we saw the working capital opportunity in the deal and we also made sure we got an express line of credit with the SBA loan like that was then a lot of liquidity to go and do another deal. It was more liquidity than we had at the start, right.
Even by the time we got through all that. So it allowed us to get velocity and do another deal within, within nine months. But Working capital execution is, is like, it's, it's, it's, it's like hand to hand combat, right?
It's, it's hard yards on the ground. It is working through the specific details of each vendor, researching the vendors on their size, understanding their payment dynamics and stress testing how far you can press that and optimizing it right at the optimal line right before they're reaching out.
You've got them paid and on the AR side just getting to an invoicing position as quickly as possible and making sure that you're motivating employees to do that at scale. So when we started out we had a lot less velocity of amount of loads. We've got over 10x the amount of loads now.
Want what comes before or after? Hear the full episode on the publisher's site ↗