From the numbers to the change
- Your numbers sayGross margin 6%, interest and credit losses 5%
- The cause underneathCredit to retailers, scheme claims unrecovered from principals, slow-moving stock
- What changesCredit limits by retailer, scheme claim control, stock cover by item
- What to expectNet margin visible and kept; credit days under control
An illustration of how the thinking runs, not a client result.
The numbers that matter most here
Track by principal, retailer, route and item.
| Number | Why it matters in this business |
|---|---|
| Gross margin after schemes | Scheme credit from principals is part of the margin; unpaid schemes are not |
| Retailer credit days and overdue | Interest on retailer credit can exceed the margin |
| Stock days by item | Slow lines tie up funds and risk expiry |
| Return and damage rate | Silent loss on thin margin |
| Cost to serve by route | Delivery cost against order size |
What trouble usually looks like
| The numbers show | The cause is often |
|---|---|
| Sales growing, funding cost rising | More retailer credit given for the same margin |
| Margin lower than expected | Scheme claims not collected from principals |
| Stock up in slow items | Buying for scheme volumes rather than demand |
| Small retailers cost more than they earn | Cost to serve ignored |
How we would sequence a turnaround
Credit limits by retailer
and cash-and-carry for the worst.
Scheme claim tracker
with ageing and an owner.
Stock cover rules by item.
Cost to serve by route and customer,
and minimum order values.
Net margin report by principal,
after funding.
Business under pressure? Let a CFO read your numbers.
A senior CFO reads them with you and tells you what is really going on. No cost, no obligation.
What is specific to distributors
The principal is both your supplier and your constraint. Their schemes, targets and credit shape your margin. Protecting your net margin sometimes means saying no to volume a principal wants.
Related reading
On the main CFOSurge India site: Trading and distribution CFO services · Customers pay late.
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
What truly sets them apart is their ability to dive into the details—cash flow, operations, and compliance—while simultaneously offering strategic insight that supports long-term decision-making. Their guidance has always been practical, thoughtful, and tailored to our specific needs rather than one-size-fits-all solutions.
The founders were consistently hands-on and always available for a call or conversation whenever clarity or direction was needed. That level of accessibility, combined with their integrity and absolute character in execution, built a level of trust that is rare in professional services.
They even worked with us to finetune our software (Gross Mart) so we could get micro-level details on various aspects of the business. On top of that, they streamlined our receivables follow-up process and provided valuable guidance on bank loans and valuations.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
Why does my distribution business make so little profit?
Thin gross margins are eaten by the cost of funding credit and stock. Small improvements in credit days or unrecovered claims make large differences.
How do I handle retailers who pay late?
Set credit limits, review the account, and move the worst to advance or cash-and-carry.
What are scheme claims?
Credits a principal owes for offers or targets you pass on or meet. Unclaimed or disputed ones silently reduce profit.