A manufacturing company had lost a major customer and were in a very tight cash position.  Their bankers had sent in reporting accountants and their critical report had coincided with the decision of the existing finance director to leave with immediate effect.  The bank manager was due in the next morning at 9:00am to discuss what would happen to their banking facilities.

The managing director called us urgently at 8:00pm, we agreed to meet on site at 8:00am the next morning and immediately agreed to provide an interim FD on a flexible, part-time basis.

The bank manager stated that he wanted to withdraw the overdraft facility with immediate effect, but was impressed that a replacement FD was already in position.  We managed to re-negotiate the immediate removal of the overdraft to phasing out over 3 months, which gave time to make alternative arrangements.  The invoice financing facility was agreed to stay in place.

We worked very quickly to produce both long-term (monthly) and short-term daily cash flow forecasts to show that it was possible to turn the business around with enough support.  We were able to obtain temporary extended credit terms from a small number of major suppliers, and agreed stage payment terms with HMRC for a VAT quarterly payment.  We worked to improve medium term cash by reducing procurement batch quantities, and set about vigorous cash collection from the customer base.  We covered longer term cash needs by agreeing a loan package from the director-shareholders to support the business, and obtaining a loan from a peer-to-peer lender.  We also submitted a R&D tax credit claim which provided a cash injection.

Working very closely with the finance team we were able to deliver the cashflow required to work within the reduced banking facilities, remove the company from the bank’s “special measures” team and retain a good working relationship with the invoice finance team.  Management accounts were produced within two days of each month end.  Two years later all that emergency debt has now been repaid and the business continues to trade.