Twelve months ago, a disruption in revenue streams meant that solar roofing company PetersenDean – when faced with an unexpected working capital shortfall – had a choice: delay payments to suppliers while it rebuilt its cash reserve or look for a different solution. Reluctant to do the former, the company chose to implement a supply chain finance (SCF) programme to help solve this challenge – and hasn’t looked back since.
When I went to bed on 14 December 2016, the company was looking into the eye of a storm. PetersenDean had just posted a record year – for both revenues and profits and the next year was looking even better. Sure, cash flow always felt a little tight, but that was a function of our growth. For PetersenDean – and for the rest of the sector – we generally paid our bills faster than we generated revenues. For us, that difference amounted to around 20 days. As a result, we’d drawn most of our credit to support our growth.
Still, so long as we continued at this pace, we’d generate plenty of cash to fund our growth.
When it rains, it pours
But then the weather then took an aggressive turn for the worse. Between December 2016 and March 2017, California received more than 30 inches of rain. Even more significant was the number of days it rained. We experienced the highest number of rainy days and the second-highest recorded rainfall in 122 years, according to the United States National Centers for Environmental Information.