SCAFFOLDING & LOFT CONVERSIONS BUSINESS - 'F2' LTD

This company was engaged in scaffolding and loft conversion work. The directors had earlier acquired the scaffolding business which was in decline following the death of the founder.

It took longer than anticipated to turn the business round, in tough trading conditions. This had created sizeable losses putting the overdraft facility under severe pressure. This worsened when suddenly sales started to pick up because demands on working capital had to be funded.

With a weak Relationship Manager the case was immediately passed to the Recoveries section of the Bank. Overnight, the overdraft facility was drastically cut and insolvency practitioners commissioned to report on options.

Despite acute financial problems and creditor-strain, we managed to prioritize payments to satisfy the Bank about the immediate term cash flow and on the back of a positive report from the Corporate Recovery guys, the original facility was gradually restored.

Of course it's simplistic to think that these sorts of financial problems disappear overnight. They didn't. It took more than 6 months.

But over that time the Directors became more conversant with what needed to be achieved in terms of the numbers and took steps to harden margins and restructure costs. While still under some financial pressure, the situation stabilised to a degree and the directors could consider funding options on their own terms. And the existing lender was sufficiently impressed to want to retain their business.

What does this case demonstrate?

You can snatch victory from the jaws of defeat. But it's as much a function of the strength of character of the directors [and perhaps their advisers] as the numbers themselves.

And while it's right to stress that you have to stick in there and deal with the pressures that arise, you have to do so on the basis of knowing that if you do what's prescribed you will emerge the other side. And critically, with our understanding of their cash flow, we could give the directors that level of assurance.

Working With You - How We Charge

Free initial meeting (in confidence and without obligation).
We offer a quick initial view at sometimes reduced rates to establish if a business can be made viable or has gone too far.
We can work on a day-rate basis. Tends to be where work is one-off or short-term in nature or in situations that, at the time of our involvement, are inherenetly uncertain.
We can work based on a monthly retainer where the relationship is envisaged to be ongoing, for instance non-exec finance roles or detailed profit improvement programmes.

 

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