Financial crisis

This publishing company had been in business for 15 years, but several years of losses had brought it to the brink of collapse, with major creditors up to a year overdue. Creditor pressure was taking up ever increasing amounts of staff and management time and bringing the business to a standstill. The Finance Director and Financial Controller had left.

Paul Kelly stepped into the company on a full time basis to help the Managing Director stabilise the position, and to support attempts to find a route out of the situation. His principal actions were to:

  • re-organise the accounting function and manage the clean up of the accounting records to get accurate liability information;
  • introduce daily cashflow forecasting to allow tactical use of the limited cash available;
  • work with potential acquirers;
  • following a sale out of receivership, work with the new owners to integrate the business into the new group.

From this the company gained:

  • improved credibility with its suppliers which in turn gave it the flexibility to continue trading and generating profit and cash for eight months, when initially the position had looked immediately hopeless;
  • the Managing Director had more time to try and turn the business round or find an optimal purchaser, ultimately concentrating on the sale of the business as a going concern, with no job losses;
  • the appreciation amongst all managers of the profitability and cashflow implications of trading decisions was heightened;
  • robust and detailed forecasting systems allowed the company to amend its plans to maximise returns whilst living within its resources.

The skills required of the Interim Manager to achieve this were:

  • high level financial management and planning skills and experience;
  • interpersonal skills;
  • credibility with management and third parties.

The assignment lasted for 13 months – two thirds of that pre-receivership, and the rest post-sale integration.