We were approached by the shareholders of a business that was facing a number of challenges and recognised the need for external support.
Craig Alexander Rattray had previously assisted the owners in an external finance raising exercise and was familiar with the sector and the people involved. Company turnover was approximately £6 million, but was loss making following a difficult 12-month period.
The company had a number of challenges:
- the recent resignation of the Finance Director, and forthcoming loss of other members of the Finance Team
- ongoing intensive monitoring by the “intensive care” division of the bank
- arrears of sums due to HM Revenue and Customs
- the due diligence exercise being carried out by a potential trade partner
- the requirement to prepare a “business plan” and financial projections, in addition to an annual budget for submission to the bank
We worked with the senior management team over a three month period and provided the following services:
- part-time Finance Director role, providing ongoing assistance to the Finance Department and senior management team
- overseeing the relationship with “the intensive care division” of the bank, ensuring regular dialogue and assistance with information requirements of the bank
- assistance with the due diligence process and the preparation of information and responses to questions and additional information requests from the potential trade partner
- introduced various changes to the management reporting pack and preparation of financial information
- assistance with the restructuring of the Finance Department, including a change in roles and responsibilities
- assistance with the “business plan”, financial projections and annual budget
- advice in respect of HM Revenue and Customs arrears
The following successes were achieved:
- ongoing banking support and extension of banking facilities thereby allowing investment required to increase turnover and profitability
- preparation of a revised budget based on the changes and improvements made to the business during the previous three months, thereby showing a significant turnaround from a loss of c£250k to an operating profit in excess of £1 million. The last quarter showed an operating profit of in excess of £250k.
- deferral of c £500k of HM Revenue & Customs arrears over a 12-month period
As a result of our work done including the change in financial management approach, the improvement in financial performance, ongoing banking support and deferral of HM Revenue & Customs arrears, the company renegotiated its arrangement with the potential trade partner and secured advantageous terms
In summary, this case shows our flexibility and the range of services and support that can be provided. Our external support allowed the senior management team to focus on “running the business”, safe in the knowledge that the key financial issues were being dealt with timeously and successfully.
Key outcomes of the role included:
- Creation and implementation of recovery plan
- Strong financial management and revamped financial infrastructure
- Successful management of the bank and increase in facilities
- Negotiation or time to pay arrangement with HMRC
- Renegotiation of trade partner agreement
- Financial information used to run the business