I had previously met the CEO at a networking event and together with support from the mortgage lender for whom I had done a previous assignment with, I was asked to conduct an initial analysis of the business and financial situation to form the basis of what would be needed going forward.
Although the organisation was 200 miles from my home, it was on a fast rail route and I could get there in about two and a half hours. By combining remote working (including the use of Skype) with onsite days as required I was able to work efficiently and avoid overnight stays, and while the commitment of days was high in the first few weeks, it tailed off to a level of about two days per month after about three months. Since I work to a portfolio approach where I have several projects on the go at any one time, this fitted in well.
Brief
- To establish the actual financial position of the organisation including producing up to date management accounts and cash flow forecasts.
- To stabilise the cash flow in the immediate term.
- To develop and analyse strategic and financial options for the board including potential for turnaround, restructure, merger, and closure.
- To prepare a plan and negotiate as needed with funders, creditors and stakeholders.
- To support the board and senior management through the implementation of their agreed option.
The result: initial process
I worked with the board and CEO to provide them with clear analysis of the options and they decided to work to a turnaround plan. I negotiated support and time from key creditors to develop and implement this plan. I helped the board and CEO to bring in a short term interim business manager to work alongside myself to help drive and deliver the restructuring processes (staff and buildings), and improvements to business performance.
I continued to act as an interim finance director throughout the first 12 months including leading on the financial issues at board meetings before gradually handing over the lead to another board member and after a new finance manager had been recruited (the original finance director had resigned).
The result: long term
Once the cash flow had been stabilised the focus was on moving to a sustainable business model and structure, which was achieved. This also meant that creditors were eventually paid in full while the mortgage provider was able to significantly reduce its exposure as a result of the improved business performance and consolidation of the buildings. Something that would have been less likely if the organisation had gone into a formal insolvency process.
Quick wins
- Established the actual financial position and stabilised the cash flow.
- Received support from key creditors and stakeholders to develop a turnaround plan.
- Improved governance and financial control put in place.
- Quickly gained confidence from the (slightly sceptical) board.
Long wins
While there were a number of job losses the group continued to deliver key services and has returned to profitability, and has also been successful in winning new contracts and funding.
- Helped to demonstrate to the auditor that this was a going concern.
- Restructuring included the rationalising of its buildings portfolio (from four to one) which helped to pay off debts and also provide the foundation for investment into making its remaining building fit for purpose, hence improve efficiency and service delivery.
- New viable strategy and three-year business plan in place although my occasional support is still requested.
Interim Management, August 2014
