Manufacturing group with 4 entities: how consolidation killed cash gaps that lasted 3 years
Manufacturing business at $32M revenue. 4 entities. Cash gaps twice a quarter. Owner: «One entity has lots of cash, another has none, I don't get where the money is».
STARTING POINT
Four related entities: manufacturer (core), trading house, logistics, service/repair. 60% of revenue is internal turnover between them. Each its own bank, its own books, its own real cash position.
Reporting once a quarter, separately for each. Group consolidation: a quarterly Excel assembled by hand over 11 working days.
What we found
- Inter-company AR/AP unmatched: $1.2M stuck in transit accounts
- Cash silos: $640K sitting in one entity while another paid 22% overdraft to make payroll (the rate at the time; for comparison, according to National Bank of Ukraine statistics, the average rate on new hryvnia loans to businesses in January 2026 was 16.47%)
- Margin per entity calculated separately, without IC eliminations: trading house «profit» turned out to be a group loss
- Cash gaps surfaced with the quarterly report: too late to react
This is not an exception. In a BlackLine survey, 99% of intercompany accounting specialists at large international companies said they struggle with these processes.
Architecture
Not a new ERP. Not a restructure of legal entities. Four engineering changes on existing infrastructure: cash pooling, group-level treasury, real-time IC reconciliation, group 13-week cash flow.
01. Cash pooling
Tax-efficient cash pool: one master account (the manufacturer), three sub-account levels. Daily auto-sweep at the end of the day. The overdraft is cancelled: internal liquidity covers most needs.
02. Group-level treasury
A separate function at CFO level. One person who sees the group cash position in real time and decides on movement between entities. Not bookkeeping: a separate discipline.
03. Real-time intercompany reconciliation
An intercompany invoice is tagged IC and automatically matched when paid. No more quarterly reconciliations. Gaps are visible within 24 hours, not 90 days.
04. Group cash flow over 13 weeks
One consolidated 13-week report, updated weekly. Instead of «cash position by entity», a group view with drill-down. Cash gaps are now visible 6+ weeks before they would have become fact.
Result after 6 months
| Cash gaps | 0 (vs 6 in prior year) |
|---|---|
| Working capital need | −$2.4M (released from transit accounts) |
| Group close | from T+11 to T+6 |
| Owner time on «where's the cash» | from ~6 hrs a week to 30 min a week |
Owner now sees the group as one business, not four silent pockets.
What we would do differently
We launched the 13-week cash flow before consolidation. In the first four weeks we almost lost the client over another cash gap. The solution would have appeared at once if the 13W report had already been in place. Now it is the first step in any such mandate.
Details and amounts have been changed for client confidentiality; the essence and scale of the result are conveyed accurately.