Craig Alexander Rattray was introduced to a company that had endured a difficult trading period and was operating continually at its overdraft facility limit.
The bank was “nervous” with respect to cashflow, trading, quality of financial information and arrears to HM Revenue and Customs, and effected the introduction as they also wanted a fresh perspective financially and commercially.
The company’s services were heavily weather reliant and the adverse weather had resulted in significant downtime, additional costs and an order book in excess of £1m (c15% of turnover) uncompleted at year end.
Despite the above challenges, the company had made a modest six figure profit for the year. However, the impending quiet first quarter created great concern.
As a result of the shortfall in turnover and poor performance in the prior year, there was significant strain on the company’s financial position and they were operating very close to, and in some cases in excess of, the overdraft facility limit on a daily basis. There were also significant arrears to HM Revenue & Customs in respect of VAT and payroll taxes.
We worked closely with the directors and main banking partner and delivered the following:
- An “Initial Review Project” which outlined the reasons for the prior year performance; operational business changes that we had instigated; an updated order book status (in excess of £4m); a revised budget for the financial year; a rolling 13 week cashflow; a proposed agreement with HMRC subject to additional bank support and restructuring of existing debt; revised management roles including the retention of Craig Alexander Rattray on a part-time basis; and a new financial management and reporting infrastructure.
- We proved viability and that the bank should continue to provide support and indeed extend such support. This also allowed us to conclude the HMRC Time-To-Pay agreement.
- We restructured the existing debt, refinanced existing asset finance facilities, and introduced c£250k from the shareholders which was matched by the bank.
- Performance for the year to date was ahead of budget and the company operated in credit during certain occasions within the month. Profitability in both May and June exceeded the full year prior year PBT figure and the company was on target to outperform against a demanding budget.
- Changes were made to pricing, methodology of delivering projects and a focus on gross profit and cashflow.
- Monthly management and finance meetings were introduced and actions followed-up on ensuring greater focus and accountability.
- As a result of the strong performance the company decided to recruit three members to the management team in an effort to grow the business and take advantage of its excellent market positioning.
Craig Alexander Rattray was been retained on a part-time basis to assist the company in managing the transformation, ensuring that the team remained accountable, and playing a key role within the Strategic Financial Management of the company.
Key outcomes of the role included:
- Creation and delivery of turnaround plan.
- Renegotiation of bank facilities and increase in working capital facilities
- Significant investment by existing shareholders
- Strong financial management and revamped financial infrastructure
- Financial information now used to run the business
- Rolling weekly cash forecasting used to manage the payments
- Return to profitability