The Situation
An industrial trading company has grown aggressively across Malaysia and several ASEAN markets. Revenue has increased from approximately RM150 million to RM300 million in three years.
Short-term borrowings and trade facilities have risen from approximately RM25 million to RM75 million, receivables now exceed RM60 million and inventory has increased to around RM50 million.
Sales wants more financing so large orders are not lost. Finance is worried about leverage and liquidity. Operations wants more inventory to protect service levels, while customers demand longer payment terms.
The company may be becoming larger without necessarily becoming stronger.