Situation

Craig Alexander Rattray was introduced to the directors of a business with significant growth potential.

The business had shown strong growth over a number of years, but this had stalled as a result of poor financial management and a resulting lack of confidence from the bank.

Task

Following an Initial Review exercise, we identified a number of key areas requiring improvement and were invited by the shareholders to work with the management team to effect these.

Action

As part of our role, we worked closely with the bank to identify the changes required to improve their confidence, thereby allowing the provision of the increased working capital facilities required to deliver the growth opportunities. We also worked closely with the operational team, to identify the information required to run the business from their perspective.

We improved the reporting culture within the company, altered the roles and responsibilities of the finance team members and recruited two new staff to assist in the process. The improvement in the revised information allowed more effective internal reporting and a greater understanding of the business, from a profitability and cashflow basis. The revised financial reports that the bank received on an ongoing basis provided them with the key information they required, and over the course of several months the bank continued to increase facilities on an “as required” basis to finance growth.

The budget for the current financial year was updated to reflect the changes and the opportunities that the company was now in a position to deliver.

A greater focus was placed on cash and cash collection, and a rolling cashflow model was introduced alongside weekly “cash” team meetings. Debtor days were reduced significantly and the new information was used to “run the business”.

The company operated successfully with this reorganised structure and this benefitted all parties with performance in line with budget, and a new corporate and professional approach from a finance perspective.

Craig Alexander Rattray provided ongoing support through a part-time Finance Director role and acted as the key point of contact for the bank.  This worked well for all parties and allowed the operational management team to focus on “running the business”.

This Case Study shows strength of having good financial information and working closely with the bank as without it the company would have been unable to take advantage of the growth opportunities.

It also shows the importance of performing the simple tasks well and restructuring an organisation to meet the changing demands on the business.  As in many cases, a focus on strong financial management and cash management is the key to success.