Waste Services & Construction: Managing cashflow in the short- and long-term

Simon Walters has completed a five-month assignment assisting the turnaround of a waste management and construction services company.

Working two or three days a week at the client’s premises, Simon reported directly to their managing director, as well as to the business recovery department of the mid-tier accountancy practice appointed by the client’s bank to report on the company’s viability.

The client had a full-time finance director, but he was overburdened and needed support. The company was struggling to stay within its overdraft facility, with the FD concentrating on juggling cashflow and unable to look at either “the bigger picture” or the minutiae of its finances.

One of the first initiatives was arranging to pay lots of tiny creditors. For a few thousand pounds we reduced creditors by 90% (by number) – albeit only a small percentage by value – thus reducing the number of calls from angry suppliers, the number of nasty letters, and the number of county court judgements

The bank’s business support team (their “intensive care unit”) took great comfort from our involvement. We provided them with weekly P&L information and a commentary.

Simon’s work included:

• Reviewing direct debits and cancelling unnecessary payments
• Advising on unprofitable strands of turnover (the sale of builders merchant products, for example), pruning staff numbers, selling excess stock, and thereby stopping losses
• Improving credit control, as debtors were building up
• Achieving payment holidays on leased equipment
• Reducing terms of trade from end of month following invoice to 30-days, achieving cash flow advantage
  
• Selling unused equipment
• Inviting two brokers to pitch for insurance, saving £20,000 pa, including advising the removal of cover for equipment no longer owned!

And finally Simon introduced a buyer for excess land, achieving £300,000 above the price that they expected, so that the gearing ratio was significantly reduced.