Sioux Steel Boosts Days Payable Outstanding by over 30% with Quartix
In early 2019, Sioux Steel Company was about to enter its peak season. Peter Shaw, Sioux Steel’s CFO had to make sure that the company has the working capital it needs to ramp up production. To balance Sioux Steel’s ever growing payment terms with customers, payment terms with vendors had to be rationalized. With Quartix, Sioux Steel was able to double its payment terms with high-spend vendors to boost Days Payable Outstanding (DPO) by over 30% at no cost to it with and without a negative impact on vendor relations.
The Client: A Manufacturer Of Agriculture Equipment From The Midwest
Sioux Steel Company is a 4th-generation family-owned manufacturer of grain bins, buildings, livestock equipment, paddle sweeps and garden beds located in Sioux Falls, SD. Sioux Steel has been manufacturing high-quality,durable products that farmers have relied upon for a century.
The Challenge: Rationalizing DPO To Lower Cash Conversion Cycle
As a family-owned business, Sioux Steel has been working with many of its vendors for decades, developing long-term, close relationships. Vendor payment terms have not changed in years, while customers continued to push Sioux Steel to provide longer payment terms, increasing Sioux Steel’s Days Sales Outstanding and leading to growing working capital requirements.
To reduce working capital and lower its cash conversion cycle, Sioux Steel had to rationalize its payment terms with vendors while making sure that these decades-long relationships aren’t negatively impacted.