At a Glance
Financial advisory services helped a Kochi-based industrial engineering company recover from a severe working capital crunch. The company cut its receivable cycle by 37% and its finance costs by 22% within 6 months.
- Days Sales Outstanding (DSO): 145 days → 92 days
- Cash conversion cycle: 160 days → 98 days
- Overdraft utilization: 95% of sanctioned limit → 64%
- Finance cost (interest expense): reduced by 22%
Key Takeaways
- Working capital stress often looks like a sales problem. It usually isn’t. It’s a collections and cash flow visibility problem.
- Engineering and EPC companies carry structurally longer cash cycles than most sectors. That makes proactive treasury management essential, not optional.
- A single overdraft facility running near its sanctioned limit is a warning sign, not a normal operating state.
- Retention money and milestone billing delays from government clients need active follow-up. They rarely resolve on their own.
- A 13-week rolling cash flow forecast turns reactive firefighting into planned, proactive decision-making.
- Financial advisory services pay for themselves fastest when engaged before a liquidity crisis, not during one.
India Inc has tightened its working capital cycle to a three-year high. Net working capital cycles fell to 35.02 days in FY26, down from 42.86 days in FY25, according to provisional CMIE data reported by Business Standard. But that broader improvement masks a real divide. As Business Standard’s own reporting on the capital goods sector notes, engineering and capital goods companies are often a cyclical laggard.
Their businesses are working capital intensive by nature, with long project gestation periods. Orders depend on corporate investment cycles, and payments often depend on government or PSU clients whose billing and release cycles move slowly. For engineering companies caught in this gap, financial advisory services are often the difference between a temporary cash crunch and a genuine solvency crisis.
JPKAD recently worked with a Kochi-based industrial engineering company. The company executes infrastructure and industrial projects, largely for public sector clients. Revenue had grown steadily. But cash was running out faster than new orders could replace it. The company’s overdraft facility was near its sanctioned limit. Vendor payments were slipping. This case study explains how JPKAD’s financial advisory services helped the company recover.
Why Financial Advisory Services Matter for Working Capital Recovery
Engineering companies rarely fail because of a weak order book. They fail because cash runs out before receivables convert. Without structured financial consulting, engineering firms commonly face:
- Long receivable cycles from milestone billing and retention money held by clients
- No rolling cash flow forecast, leading to reactive, last-minute borrowing decisions
- Overdraft and cash credit facilities stretched close to their sanctioned limits
- Vendor payment delays that threaten material supply for active projects
- No treasury function tracking cash position across multiple ongoing projects
This isn’t a hypothetical risk. JPKAD’s own advisory work has produced measurable results elsewhere. A manufacturing client in Thrissur saw a 25% improvement in working capital efficiency within six months. Better cash flow forecasting and tighter inventory management made the difference. Businesses facing similar pressure can contact JPKAD’s advisory team to assess their working capital position.
Executive Summary
Client Overview: Kochi-based industrial engineering company executing infrastructure and industrial projects, largely for public sector clients, with ₹58 Cr annual revenue and 210 employees.
Challenge: A severe working capital crunch driven by delayed receivables, an overstretched overdraft facility, rising finance costs, and no structured cash flow visibility.
Solution: Comprehensive financial advisory services covering receivables restructuring, cash flow forecasting, debt and banking relationship management, vendor payment stabilization, and a new treasury function.
Outcome:
- Reduced Days Sales Outstanding from 145 days to 92 days
- Cut the cash conversion cycle from 160 days to 98 days
- Brought overdraft utilization down from 95% of the sanctioned limit to 64%
- Reduced finance costs by 22% through renegotiated banking terms
- Reduced dependence on short-term borrowing by 28%
- Stabilized vendor relationships, removing the risk of material supply disruption
Client Overview
Industry: Industrial and infrastructure engineering (EPC)
Operations: Project execution for public sector and industrial clients across South India
Business Model: Design, procurement, and construction of industrial and infrastructure projects
Scale: ₹58 Cr annual revenue, 210 employees
Primary Concern: Severe working capital stress threatening project execution and vendor relationships
The Challenge: Growing Order Book, Shrinking Cash
The company’s order book looked healthy. New project wins were steady. But the finance team was spending most of its time managing cash, not growth.
Management initially assumed the problem was demand. It wasn’t. JPKAD’s assessment found a business collecting cash far too slowly, with no forecasting process to see the crunch coming.
Key Challenges Faced by the Engineering Company
1. Delayed Receivables from Government and PSU Clients
A large share of the company’s revenue depended on public sector clients. Their billing and payment cycles moved slowly.
Specific Issues
- Milestone billing approvals delayed by 30 to 45 days on average
- Retention money held back well beyond project completion
- Variation claims for additional work left undocumented and unbilled
- No dedicated process for following up on overdue government payments
- No visibility into which invoices were at risk of further delay
2. No Cash Flow Forecasting Process
The finance team tracked bank balances daily. It had no forward-looking view of cash needs.
Specific Issues
- No rolling cash flow forecast across active projects
- No project-wise working capital tracking
- Borrowing decisions made reactively, often at short notice
- No early warning system for upcoming cash shortfalls
- Working capital assumptions never tested against actual project timelines
3. Overstretched Short-Term Borrowing
The company relied on a single overdraft facility that was consistently near its sanctioned limit.
Specific Issues
- Overdraft utilization running at 95% of the sanctioned limit
- No secondary credit facility or backup liquidity source
- High finance costs eating directly into project margins
- No bill discounting or invoice financing arrangement in place
- No structured relationship with the bank beyond the existing facility
4. Vendor Payment Pressure
Cash constraints were starting to affect the company’s ability to pay vendors on time.
Specific Issues
- Payment delays to critical material suppliers
- Rising risk of supply disruption on active projects
- No prioritization framework for which vendors to pay first
- Vendor trust eroding, with some suppliers tightening credit terms
- No vendor financing or supply chain finance option explored
5. No Treasury Function or Structured Reporting
Financial oversight was informal, run by a small finance team focused on transactions, not strategy.
Specific Issues
- No dedicated treasury function managing cash centrally
- No monthly MIS tracking project-wise cash position
- No banking relationship strategy beyond day-to-day transactions
- No policy governing working capital targets or borrowing limits
- Leadership lacked a single, reliable view of overall liquidity
How JPKAD’s Financial Advisory Services Solved the Crisis
Receivables and Billing Cycle Restructuring
Process Implementation
Milestone Billing Review: Renegotiated billing terms and approval timelines with key clients
Retention Recovery: Followed up systematically on overdue retention money
Variation Claim Documentation: Documented and billed previously unclaimed variation work
Client Engagement: Established direct contact with client finance teams to track payment status
Impact
- Reduced DSO from 145 days to 92 days
- Recovered a significant portion of overdue retention money
- Billed and collected on previously undocumented variation claims
- Established a repeatable process for tracking receivables risk
Cash Flow Forecasting and Working Capital Management
Process Implementation
Rolling Forecast: Built a 13-week rolling cash flow forecast across all active projects
Project-Wise Tracking: Created a dashboard tracking working capital by project
Working Capital Policy: Set clear targets for receivables, payables, and borrowing limits
Early Warning System: Flagged projects at risk of cash shortfall weeks in advance
Impact
- Cut the cash conversion cycle from 160 days to 98 days
- Gave leadership a forward-looking view of cash needs for the first time
- Reduced reactive, last-minute borrowing decisions
- Enabled proactive planning around upcoming project cash requirements
Debt Restructuring and Banking Relationship Management
Process Implementation
Facility Renegotiation: Renegotiated terms on the existing overdraft facility
Bill Discounting: Arranged an invoice discounting facility against verified receivables
Banking Consolidation: Structured a clearer, single point of contact with the primary bank
Rate Renegotiation: Negotiated a lower effective interest rate on short-term borrowing
Impact
- Reduced overdraft utilization from 95% to 64% of the sanctioned limit
- Cut finance costs by 22%
- Reduced dependence on short-term borrowing by 28%
- Created liquidity headroom for future project needs
Vendor Payment and Supply Chain Stabilization
Process Implementation
Payment Prioritization: Built a framework for prioritizing critical vendor payments
Vendor Renegotiation: Renegotiated payment terms with key material suppliers
Supply Chain Finance Review: Assessed supply chain finance options for large vendors
Communication Plan: Structured proactive communication with vendors on payment timing
Impact
- Removed the immediate risk of material supply disruption
- Restored vendor confidence and credit terms
- Reduced the number of vendors on tightened payment terms
- Protected project timelines from vendor-related delays
Treasury Function and Financial Reporting Setup
Process Implementation
Treasury Function: Established a dedicated function to manage cash centrally
MIS Reporting: Built monthly reporting tracking project-wise cash position
Governance Policy: Documented working capital and borrowing policies for ongoing use
Leadership Reporting: Gave leadership a single, reliable view of liquidity
Impact
- Created lasting financial infrastructure beyond the immediate crisis
- Gave leadership real-time visibility into cash position
- Established a repeatable reporting cycle for future projects
- Positioned the company to scale without repeating the same crisis
Results Achieved Within 6 Months
Within six months, the company moved from crisis to control. Days Sales Outstanding fell from 145 to 92 days. The cash conversion cycle dropped from 160 to 98 days. Overdraft utilization fell from 95% to 64% of the sanctioned limit. Finance costs dropped by 22%. Vendor relationships stabilized. Leadership gained a clear, forward-looking view of cash for the first time.
Key Business Impact
Restored Liquidity
Lower overdraft utilization gave the company real breathing room for the first time in over a year.
Lower Finance Costs
Renegotiated banking terms cut interest expense, directly protecting project margins.
Stronger Client Collections
A structured follow-up process turned overdue receivables into predictable, collected cash.
Lasting Financial Infrastructure
The new treasury function and reporting cycle mean the crisis is unlikely to repeat.
Why Finance Strategy Consulting Matters for Engineering Companies
Engineering and EPC companies carry structurally longer cash cycles than most industries. Long project gestation, milestone billing, and public sector clients all add delay. Experienced financial consulting firms help by:
- Restructuring receivables and billing cycles before cash pressure becomes a crisis
- Building rolling cash flow forecasts that catch problems weeks in advance
- Renegotiating banking relationships to reduce finance costs and free up liquidity
- Stabilizing vendor relationships before supply chains are put at risk
- Establishing treasury and working capital management as an ongoing function, not a one-time fix
Businesses facing similar pressure can also explore JPKAD’s Corporate Finance Advisory and Virtual CFO Services. For a broader look at how financial consulting firms support Kerala businesses, see JPKAD’s guide to financial advisory firms.
Conclusion
A strong order book is not the same as a healthy business. For this engineering company, the real risk was never demand. It was cash.
This case study shows how JPKAD’s financial advisory services helped the company recover. Receivables, banking terms, and vendor relationships were all restructured within 6 months. The company moved from crisis to control. Contact JPKAD to discuss working capital recovery for your business.
Frequently Asked Questions
- What do financial advisory services cover for a working capital crisis?
Financial advisory services for working capital recovery typically cover receivables restructuring, cash flow forecasting, debt and banking renegotiation, and vendor payment stabilization. The goal is to fix the immediate crunch and build lasting cash discipline.
- Why do engineering companies face working capital stress more than other sectors?
Engineering and EPC companies have long project cycles. Billing depends on milestones, and clients are often government or PSU bodies with slow payment cycles. This combination creates structurally longer cash conversion cycles.
- What is treasury and working capital management?
Treasury and working capital management is the ongoing process of forecasting cash needs, managing receivables and payables, and maintaining the right borrowing and liquidity structure. It turns cash management from reactive to proactive.
- How quickly can financial consulting improve a company’s cash position?
Timelines vary, but meaningful improvement is often visible within 3 to 6 months. In this case, the engineering company saw a 37% reduction in its receivable cycle within 6 months.
- What is Days Sales Outstanding, and why does it matter?
Days Sales Outstanding, or DSO, measures how long it takes a company to collect payment after a sale. A high DSO ties up cash that could otherwise fund operations or growth.
- Can finance strategy consulting help before a cash crisis happens?
Yes. Finance strategy consulting is most valuable before a crisis, not during one. Early cash flow forecasting can catch a looming shortfall weeks or months in advance.
- Do financial consulting firms only help with cash flow, or also with financing?
Most financial consulting firms cover both. This includes cash flow forecasting and collections, as well as renegotiating banking facilities, arranging invoice discounting, and reducing overall finance costs.
- What is the first step in recovering from a working capital crisis?
The first step is usually an honest assessment of the cash conversion cycle. This means understanding exactly where cash is stuck, whether in receivables, inventory, or payables, before deciding what to fix first.