The Full Story
The merger of two multinational media companies created complex integration issues for MediaCo, the combined entity. To run the new business, improve cash conversion, and manage investor expectations, MediaCo sought a sharper understanding of the combined companies’ working capital. More than ever, leaders needed precise real-time views of free cash flow conversion and the impact of working capital on MediaCo’s market capitalization.
Using our Net Working Capital Excellence solution, we helped MediaCo radically improve its cash conversion cycle. In two months, we identified opportunities to unlock over $800 million in cash benefits. We designed a new tracking and reporting system, supported by a user-friendly dashboard, to help finance leaders in each of MediaCo’s business units monitor their performance.
In two months, we identified opportunities to unlock over $800 million in cash benefits.
Our approach started with an eight-week diagnostic to analyze working capital improvement opportunities in MediaCo’s accounts payables and receivables. We looked at the management of vendor relationships, including invoices from receipt to payment, analyzing the previous 18 months of third-party purchases and reviewing the payment terms in each category. In receivables, we reviewed the process from the issuance of invoices to the timing of the collection and uncovered the causes of customer payment delays. We also studied MediaCo’s processes for order-to-cash and procure-to-pay to understand the inefficiencies affecting working capital.
We confirmed the CFO’s suspicion that MediaCo’s poor free cash flow conversion had two main causes: widespread collection delays and vendor terms that were shorter than industry average. MediaCo’s customers were often significantly late in making payments. To remedy this, we determined the specific causes of collection delays and identified substantial opportunities for improvements. For payables, we helped MediaCo institute a new focus on managing its supplier base. In all, we analyzed, sized, and prioritized more than 15 specific opportunities to enhance MediaCo’s performance on cash conversion.
We helped MediaCo achieve
in the first eight months
The second phase of our work focused on implementation. Collaborating with representatives from across the company, we developed a roadmap for change, providing feedback on financial targets, supporting the development of communication plans, and helping set program governance goals. MediaCo established a project management office (PMO) to rehearse rollout strategies and workplans and to help launch pilot programs to test updated processes. We supported the PMO on overall governance, program oversight, and CFO reporting, and we guided the functional working teams charged with taking specific actions to achieve value and determine the cash impact of working capital improvements.
Over the 12-week implementation phase, we designed and executed the improvement plan with MediaCo’s receivables teams, which included supporting the launch of a set of initiatives designed to achieve the CFO’s in-year working capital targets.
MediaCo is well on its way to a successful multiyear working capital transformation, capturing overlooked value throughout the company thanks to targeted actions that improve customer collections and vendor terms management. Our integrated plan has helped MediaCo achieve substantial cash gains across all six of its working capital substreams, including $300 million in the first eight months of the program.
For the first time since its merger, MediaCo’s leadership has a unified and accurate view of the current state of working capital across the whole enterprise. These leaders have the tools to ensure more accountability and ownership over working capital objectives, and they know how to take action to improve free cash flow conversion.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.